A former Minister of Finance, Kemi Adeosun joined noble prize-winning economist, Joseph Stiglitz in the panel of discussion at the sovereign debt crises in Paris, a statement by the organisers on Wednesday has said.
Adeosun was Nigeria’s finance minister from November 2015 to September 2018.
While speaking during the event, Adeosun, said that the long periods needed to carry out debt restructuring such as that in Zambia have their roots in lack of action before a default takes place.
She said that countries in debt distress were often reluctant to admit it due to the need to cut social spending, especially in democratic countries. “That means there is a tendency to “kick the can down the road,” Adeosun said.
According to her, “Eurobond holders need to initiate conversations with sovereigns ahead of a potential default, she said. If the sovereign is then able to keep servicing its debt, then there has been some loss of time, but when a restructuring is needed, such conversations would ensure the process “has a head start.”
Stiglitz said that lack of international mechanisms for sovereign debt restructuring hampered the prospects for Africa achieving sustainable public finances or being able to contribute to the clean energy transition.
Speaking further, Stiglitz explained that the difficulty of coordination between diverse creditors including China and Western hedge funds that, “Don’t trust anyone else makes debt restructuring more difficult.
“We have no framework for debt restructuring across sovereigns and the result is too little debt restructuring, too late.”
The statement further said that debt restructuring for Zambia had been protracted since the country defaulted on its debt in November 2020.
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