IMF Urged to Update Debt Sustainability Framework to Prevent Rising Debt Risks – Governor
Dr. Johnson Asiama, Governor of the Bank of Ghana, has called on the International Monetary Fund (IMF) to enhance its Debt Sustainability Framework (DSF) to better address the unique vulnerabilities of developing countries. Speaking at the 2025 African Consultative Meeting during the IMF/World Bank Spring Meetings in Washington, D.C., Dr. Asiama emphasized the need for the DSF to effectively capture emerging risks, including climate-related debt challenges and the proliferation of new debt instruments.
The DSF, established in 2005 by the IMF and World Bank, is designed to guide low-income countries in managing their debt levels sustainably. It assesses a country’s ability to meet its debt obligations without compromising its development objectives. However, Dr. Asiama highlighted that the current framework may not fully account for the evolving economic landscape, particularly the increasing exposure of developing countries to climate-related risks and complex financial instruments.
To address these concerns, Dr. Asiama urged the IMF to strengthen its risk assessment tools and early warning systems. He advocated for a comprehensive review of the Low-Income Countries Debt Sustainability Analysis (LIC DSA) to identify and rectify existing shortcomings. This review should aim to enhance the DSF’s capacity to anticipate and mitigate potential debt sustainability issues proactively.
In addition to refining the DSF, Dr. Asiama called for the IMF to continue leading efforts in debt restructuring and relief for heavily indebted countries. While acknowledging the work of the Global Sovereign Debt Roundtable (GSDR) and the G20 Common Framework, he emphasized the need for a more comprehensive debt relief strategy. This strategy should streamline processes, improve debt transparency and reporting, and incentivize private creditor participation to foster confidence and encourage early engagement.
Dr. Asiama also pointed out the significant exposure of Multilateral Development Banks (MDBs) to debt-vulnerable countries, necessitating deeper discussions on fairer debt treatment across different creditors. He called on the IMF to leverage its convening power to facilitate these discussions and promote equitable debt solutions.
Furthermore, Dr. Asiama underscored the importance of enhanced policy coordination among international financial institutions (IFIs). He urged the IMF, other IFIs, and regional bodies to better coordinate and align their financial and technical support to developing countries, considering their diverse needs and capacities. Promoting regional cooperation to address common challenges and capitalize on collective strengths is essential, especially in light of the debt vulnerabilities exacerbated by climate change.
Dr. Asiama concluded by advocating for the establishment of ambitious yet achievable and monitorable concessional financing options, joint financing mechanisms, and common policy frameworks to support developing countries in managing their debt sustainably.
In the context of Sub-Saharan Africa, Dr. Asiama highlighted that half of the countries in the region are at high risk of, or already in debt distress. This situation severely constrains fiscal space for essential social and development spending and hinders progress towards achieving the Sustainable Development Goals (SDGs). Notably, per capita public expenditure on interest payments in Africa has surpassed spending on health and education, exacerbated by declining overseas development assistance.
Despite these challenges, Dr. Asiama reaffirmed the commitment of African Governors to proactive debt management, enhancing revenue mobilization, and rationalizing expenditures to restore fiscal and debt sustainability. However, he emphasized that these efforts require stepped-up international cooperation and support from development partners, including the IMF.
The theme for the occasion was “Debt vulnerabilities in Developing Countries—a Key Challenge for Achieving the Sustainable Development Goals (SDGs)”.
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