"In the last two years, we have seen the limitations of the common framework," Axel van Trotsenburg told a panel at the World Economic Forum's annual meeting in Davos, moderated by Reuters Editor-in-Chief Alessandra Galloni.
Zambia has become a test case for the G20-led "Common Framework" restructuring vehicle launched during COVID-19 to streamline debt restructuring efforts as poorer countries buckle under the fallout from the pandemic hit. It aims to include non-Paris club members, such as China, in debt relief talks.
Non-Paris Club creditors "are now playing a very significant role and that is, I think the challenge, to bring these creditors into this process of dialogue and it is not only China, India as important creditors, (but also) Saudi Arabia and some of the Arab states," van Trotsenburg said.
"Right now we have negotiations where there is not an established debt sustainability framework. What you see in the discussions is that different creditors are challenging all the underlying assumptions," van Trotsenburg added, without specifying which creditors he was referring to.
"Take the Zambia case, but this will come up in Sri Lanka - we need to have a serious discussion on lending into arrears by financial institutions," he added.
Speaking at the same panel, Jose Antonio Ocampo, Colombia's finance minister, said there was a lack of institutional arrangements to manage debt issues.
"The lack of institutions for debt renegotiations is a major institutional problem in the world economy," he said.
