Speech

Managing Director Remarks' at the IMF Conference on Public Debt Transparency—Aligning the Law with Good Practices

May 14, 2025

Good morning and a very warm welcome to everybody, those who are in the room and those who join us online.

It is my great pleasure to join you because the topic that you will be discussing truly affects countries, businesses, communities, in a way that slows down progress and makes it harder for countries that are still falling behind to catch up.

We all know the data. Global public debt is expected to approach 100 percent of global GDP by the end of the decade. In other words, we would owe as much as we generate in one year. And this is worse than what we had during the pandemic.

You all know that governments are wrestling with tight budgets. And now with trade policy uncertainty, the fiscal trade-offs are going to be even more complicated. This is a problem everywhere in countries rich and poor, but it is particularly painful for emerging markets and developing economies, where the mounting cost of servicing debts is squeezing their ability to make investments and to respond to shocks.

It is against this backdrop that at the Fund we have been doing extensive work on issues of global debt architecture and sovereign debt restructurings. These efforts have intensified since the pandemic, and you are all aware we came up with the Common Framework, and then we realized we needed to have an inclusive space for debtors and creditors, both public and private, so we created the Global Sovereign Debt Roundtable. I see people who are members, and I want to appreciate all those who are engaged in it.

We are also actively working with authorities in Paris Club and non-Paris Club countries to bring everybody to the table for debt restructuring. Our engagement seeks to improve coordination, ensure that countries play by global rules, and very important, that there is comparability of treatment across creditors during debt restructuring.

Five years ago, much less was known about the magnitude and nature of lending from non-Paris club creditors, or how to encourage their involvement in debt restructuring. Since then, we need to recognize that significant progress has been made in helping improve transparency in lending practices and encouraging fair burden sharing across creditors, including the non-Paris Club countries.

Overtime, the G20 Common Framework has become more efficient and work in this regard continues. We are not done. We also see that the Global Sovereign Debt Roundtable plays a significant role as evidenced by the recent publication of the Sovereign Debt Restructuring Playbook. You play by the book, you get things done fast. It spells out steps to speed up the restructuring process, and it defines countries' accountability for their actions. Importantly, this also includes compiling data to give a clear picture of domestic and external debt and the creditors who hold this debt.

So why is debt transparency so important? For the reasons we were describing - Yan in her introduction, then we saw the little movie and now me.

We have high level of debt and on top of it, countries are increasingly using complex forms of financing that are often opaque. New debt instruments have emerged such as guaranteed, securitized and collateralized debt contracts linked to. public-private partnerships, state-owned enterprises and pension funds. And because of the novelty and complexity of these instruments, our experience is that too much debt remains hidden from the eyes of policymakers and from the public. And too often it comes to light only when it is late, through the debt restructuring process.

Hidden debt inflicts real costs. It saps investor confidence. It increases borrowing costs. And it puts debt sustainability at risk, which can lead to a debt crisis.

Simply put, you cannot manage what you cannot see. And this is why we need light to cut through the fog surrounding the mountain of debt. We need the right laws and requirements in both borrower and creditor countries to defer the decision-making to competent bodies so they can do what is right for debt reporting and debt management. And that is the topic of today's conference, this is what you will be doing here.

Let me say a little bit about our work at the Fund.

As we heard from Yan, we have identified debt transparency as a public good, and we have done a lot of work already.

Even if it is not labeled as debt transparency at the heart of it, when we support debt management in countries, this is what we do. Let me give you three examples.

First, back in 2023, we published a paper on ‘Making Public Debt Public.’ It looked at factors that underlie the lack of disclosure and the IMF's role in reforms. We found that debt disclosure in borrowing low-income countries and emerging market economies falls way short due in large part to the increasing share of non-marketable and SOE debt. And in keeping with the theme of today's conference, gaps in borrowing countries' domestic, legal, institutional, and operational frameworks hinder transparency. We ought to close those gaps.

Second, our debt limit policies now require more detailed transparency on debt information. Including for the first time, we require the publication of the holders of a country's public debt.

Third, in our Article IV consultations, we introduced a more structured and transparent assessment of data adequacy on debt, where broader and more granular debt data will be required. And this assessment will inform not just us, it would inform countries, and it would inform those interested to invest in countries.

We have scaled up our training on debt transparency. We have delivered over 200 capacity development projects just on debt management in the last two years.

How many of you have been following our spring meetings this year? So, for those who were here and for those who weren't, a very important message that came out of this meeting was, countries need to put their own house in order. It was a line I used in my curtain raiser speech. And then I was so delighted to hear it played back to me by country delegations. They would say, it is tough, we have to get our own house in order and getting your own house in order absolutely requires transparency.

Good law drives good practices, and it drives good arrangements. There are many questions countries need to answer. They need to answer ‘who has the authority to borrow on behalf of the country,’ ‘who can sign a valid contract,’ ‘can the state's resources be used as collateral?’ We look at the law for answers to these questions and I can tell you, they seem obvious and yet there are so many countries in which they still need to be answered.

Our Legal Department reviews debt-related legislation, as we heard from the movie, from the little clip. They did the review for 85 countries and we found several areas for improvement in legal frameworks. Less than half of the country surveyed require debt management and fiscal reporting. It's a big gap we have to close. In many cases, the legal definition of public debt is too narrow. It excludes SOEs or it excludes types of borrowing and as a result some forms of that fall outside the sovereign's awareness. When we are in a situation like this, we do have to (a) recognize what the gaps are, (b) work together to close these gaps, and I can tell you at the Fund we are at the disposal of our members to do exactly that.

We have in this conference policymakers from 72 countries. We have representatives of civil society organizations, from private sector and academia. And I am very uplifted because I think together we can make a difference. And from our side, we intend to work hard to be part of making that difference.

First, our upcoming review of debt sustainability analysis for low-income countries will consider how we can better support debt transparency. It complements the completion of a similar review of that sustainability analysis for market access countries. And I would welcome engagements as we go with this review.

Second, our work on the Global Sovereign Debt Roundtable and the Common Framework will engage constructively all relevant parties so they do their part for debt transparency. In the recent meeting of the Global Sovereign Debt Roundtable, there was a very strong commitment to it, let's get it done. Debtors can be more transparent about the debt on their books. Creditors can be more forthcoming in outlining what they are lending for. And I think we can, working together, get really good data. So good debt management becomes the norm, not the exception.

And third, we will systematically draw lessons from experience in our surveillance program and capacity development engagements to develop and share best practices in advancing debt transparency. We will periodically report on progress in strengthening legal frameworks for debt transparencies as part of our reporting on progress with the multi-pronged approach to reduce debt vulnerability. In other words, we concretely commit specifically to how we are going to act to advance this agenda.

Accurate information is so critical. I'm sure you know the saying ‘garbage in, garbage out.’ What we want is to clean the garbage.

Benjamin Franklin, to paraphrase his words, we can say ‘transparency is always good policy.’

Enjoy your work here. Have fun, get things done. Thank you.