"Debt reduction for developing countries could take years

" \n Debt reduction for developing countries could take years - World Bank economist \n \n\n \n World Bank chief economist Carmen Reinhart said it could take many more years before the growing number of heavily indebted countries see any substantive reduction in their debts. \n \n\n \n Reinhart, who returns to Harvard University on 1 July after a two-year public service leave, said the economic woes facing Sri Lanka were just the tip of the iceberg and more countries would likely join its ranks. \n \n\n \n \u201cBe prepared for the long haul,\u201d Reinhart told Reuters in a remote interview. \n \n\n \n \u201cMy fear \u2013 but I think it\u2019s fear founded on the basis of the historical experience \u2013 is that to have a comprehensive approach that actually delivers substantive debt reduction will take a long while. Years,\u201d she said, noting that the historical average was around eight years. \n \n\n \n Reinhart said Sri Lanka\u2019s woes reflected the balled force of a currency crisis, high inflation, a collapse in output, financial strains and a debt crisis, but other countries were also facing major problems. \n \n\n \n \u201cThere are more Sri Lankas on the way. You have countries like Myanmar, Laos. These are not major players in global markets, but they are falling,\u201d she said, noting that others, including Ghana and Egypt, were facing significant shocks as a result of the war in Ukraine and surging food and energy prices. \n \n\n \n \u201cThere are a lot of countries in precarious situations,\u201d she said. \n \n\n \n Reinhart said the Common Framework for debt treatments agreed to by the Group of 20 major economies and the Paris Club of official creditors in October 2020 had proven to be a disappointment, resulting in not even a single debt restructuring since its launch in October 2020. \n \n\n \n She said the lack of progress was not surprising. \n \n\n \n \u201cThe historical experience has been like pulling teeth, and slow moving at that,\u201d she said. \u201cEvery creditor has for their own reasons engaged in foot dragging. China and private creditors have their own incentives to delay.\u201d \n \n\n \n Reinhart downplayed the prospects for any significant change in the approach of advanced economies to the mounting issues facing the developing world, including the snowballing impact of the COVID-19 pandemic on learning outcomes and poverty rates. \n \n\n \n \u201cThis ain\u2019t going away quickly. Everyone is preoccupied with their own problems. There\u2019s a tendency to focus on the domestic issues and everything else goes on the back burner,\u201d she said. \n \n\n \n \u201cI hate to be like a wet rag, but I do think things will get worse before they get better. We\u2019re still trying to sort out what the new normal is,\u201d she said. \u201cMy sense is that we will see more difficult times before we turn the corner.\u201d \n "

"Debt reduction for developing countries could take years

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