US Treasury Secretary Steven Mnuchin today said rising debt levels in low-income countries threaten to generate significant economic and social instability and imperil hard-won developmental gains.
US Treasury Secretary Steven Mnuchin today said rising debt levels in low-income countries threaten to generate significant economic and social instability and imperil hard-won developmental gains. As such borrowers, international financial institutions, and other public and private creditors must collectively address these risks before they develop into full blown crises, Mnuchin said in his address to the Development Committee of the World Bank. For the second consecutive day, the Treasury Secretary said that the United States strongly supports recent efforts of the World Bank and the IMF to better track these risks and improve transparency through the debt sustainability frameworks and urge the robust application of the IDA Non-Concessional Borrowing Policy and IMF Debt Limits Policy.
“In addition, more can be done to ensure a full and transparent accounting of public debt. We call on IMF and World Bank management to develop a joint “action plan” on debt transparency and sustainability to guide future work, ensure strong coordination between institutions, and boost visibility around these efforts,” Mnuchin said.
He also called on all countries, including emerging sovereign lenders, to fully disclose public borrowing, and on the World Bank and IMF to take steps to improve the collection and analysis of debt data with an aim to improve debt transparency and sustainability. He asked the World Bank to do more in countries affected by fragility, conflict, and violence in an effort to stabilize countries before they become fragile or mitigate the impacts of conflict and violence.
The international community must ensure that sufficient attention and resources are dedicated to address key project risks, including the risk of gender-based violence and violence against project-affected communities, he said. Mnuchin said that the broad-based strengthening of the global economy over the past year is a welcome—and long overdue— development.
Heightened growth is helping to spur increased business investment, create much-needed private sector jobs, and expand economic opportunities for many around the world, he said. The challenge now is to pursue prudent reforms that lay the foundation for strong growth and shared prosperity, the treasury secretary said.
“All countries should comprehensively review their policies and regulatory frameworks to ensure that they promote investment, facilitate productive lending, encourage hiring in the private sector, and support growth of real median incomes. Broadly shared income growth is the best solution to poverty,” he said.