BAKU, Azerbaijan, February 13. A decline in
official development assistance (ODA) and increasingly complex debt
restructuring mechanisms are compounding the challenges facing
developing countries, President of the European Bank for
Reconstruction and Development (EBRD) Odile Renaud-Basso said at
the Munich Security Conference, Trend reports.


“In terms of the challenges, two additional elements should be
highlighted. The first one is a drop of ODA. You have the debt
crisis combining with a very significant drop of ODA, and this will
have an impact,” she said, noting that the allocation of limited
resources is becoming increasingly difficult.


According to her, the second major issue concerns the growing
complexity of debt restructuring mechanisms.


“I used to chair the Paris Club a long time ago, and at that
time Paris Club creditors had the bulk of the debt. Although
negotiations in the 1990s with highly indebted countries sometimes
took time, there was a structured framework that allowed creditors
to come together and agree on treatment, including debt
cancellation,” she recalled.


She added that today, however, the creditor landscape is far
more fragmented.


“You have Paris Club creditors, but they are smaller; there are
more bondholders, more private debt, bilateral private debt without
bondholders, and large bilateral creditors that do not belong to
the Paris Club. The mechanisms for cooperation are much more
challenging,” Renaud-Basso explained.







She described the G20 Common Framework as “the right approach to
bring everybody on board,” but acknowledged that the process
remains slow. “Some progress has been made, but acceleration,
better cooperation and more involvement of all sorts of creditors
is needed,” she said.


She also pointed to work carried out under the G20 capital
adequacy framework, which has helped unlock additional lending
capacity among MDBs.


Finally, Renaud-Basso emphasized the importance of facilitating
private investment that does not increase sovereign debt
burdens.


“We need to facilitate investment that is not necessarily
government debt borrowing, but investment with private investors
that can contribute to developing services, addressing needs,
creating jobs and contributing to positive growth, helping
countries get out of this debt crisis,” she said.