## 101525-gsdr-cochairs-progress-report

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---

### Executive Summary
- Debt vulnerabilities remain elevated, in particular in low-income countries (LICs), requiring continued coordinated efforts.
- Overall assessment remains similar to April.
- On average, debt levels in low-income countries (LICs) and emerging markets (EMs) have stabilized and are expected to remain stable or decline slightly over the medium term for both LICs and EMs.
- Debt levels remain higher than pre-COVID, with a few countries particularly vulnerable.
- Many countries, particularly among LICs, face elevated debt-service challenges.
- While their debt is sustainable, high interest costs or/and refinancing needs crowd out space for development spending such as education, health, and infrastructure investment.
- Recent shifts in global policies and cuts in foreign aid add to the challenges, increasing the premium on domestic reforms to:
  - enhance growth and foster resilience,
  - mobilize resources,
  - improve transparency and debtor/investor relations.
- Specific attention to rising domestic debt vulnerabilities is warranted.

- Priority actions called for:
  - Further improving restructuring processes, including under the Common Framework, to ensure countries with unsustainable debt have access to timely and adequate debt treatments.
  - Stepping up support for countries with sustainable debt but high debt-service challenges; the IMF–World Bank “three-pillar approach” provides the conceptual framework for that support.
  - Building resilience and preventing unsustainable build-up of debt by accelerating progress on debt transparency, debt management, and debtor/investor relations.

- GSDR progress since April 2025:
  - Most ongoing debt restructuring cases have moved toward completion, both under the Common Framework and outside.
  - Technical work focused on accelerating restructuring of non-bonded commercial debt, supporting early post-restructuring credit rating upgrade, helping countries with sustainable debt but high debt service challenges (including clarification on when and how liability management operations (LMOs) and credit enhancements can be effective), and strengthening accuracy and timeliness of debt data.
  - Practical solutions promoted for early and continuous information-sharing across stakeholders, including:
    - debtor-convened meeting of all official bilateral and private creditors very early in the process to explain context and goals and to facilitate parallel rather than sequential negotiations;
    - encouragement for debtors and non-bonded commercial creditors to start engaging early.
  - Broad support, but not yet full consensus, on earlier and more comprehensive publication by official creditor committees (OCCs) of key restructuring terms (including reduction in net present value) once an agreement is reached, to facilitate comparability of treatment (CoT).
  - Support for publishing timetables, with regular updates, on status of signature of bilateral agreements implementing the memorandum of understanding (MOU) between OCC and the debtor.

- Near-term deliverables and next steps supported by GSDR Principals:
  - Updated “Restructuring Playbook” to be published in April 2026 reflecting progress since April 2025, with targeted work on non-bonded commercial debt and CoT application to non-bonded commercial creditors.
  - Accelerating support to countries with sustainable debt but high debt service challenges, possibly including publication of “how-to” notes and further engagement with the G20.
  - Follow-up work to support enhanced debt transparency, debt management, and debtor/investor relations; follow-up on the World Bank’s debtor/creditor debt data sharing exercise and digital real time loan reconciliation system; renewed attention to collateralized financing practices.

- Status update on specific restructuring cases (high-level):
  - Ongoing restructurings continued to progress since April 2025 under the Common Framework (Ethiopia, Ghana, Zambia) and outside (Sri Lanka, Suriname).
  - Country-specific highlights:
    - Ethiopia: finalized the memorandum of understanding (MOU) with the Official Creditor Committee (OCC) in July 2025 and completed the 3rd review of its Fund-supported program; next steps include signature of bilateral agreements consistent with the MOU; negotiations with bondholders ongoing.
    - Ghana: completed over 95% of its debt treatment; continues to negotiate with residual non-bonded commercial creditors; completed the 4th review of its Fund-supported program in July 2025; as of end-September, four bilateral agreements signed and remaining ones being negotiated.
    - Zambia: close to full completion with 94% of required debt treatment agreed; last step involves a small group of non-bonded commercial creditors; signature of bilateral agreements ongoing; completed the 5th review of its Fund-supported program in July 2025; as of end-September, four bilateral agreements signed and remaining ones being negotiated.
    - Sri Lanka: nearly complete; completed the 4th review of its Fund-supported program in July 2025; six agreements signed with official bilateral creditors and remaining ones being negotiated; good faith negotiations continue with remaining commercial creditors.
    - Suriname: nearly completed and finalizing discussion with one remaining commercial creditor; completed bilateral agreements with all official creditors; completed the final (9th) review of its Fund-supported program in March 2025.

- GSDR and related policy work since April 2025 (selected):
  - G20 published notes in June 2025: “Steps of a debt restructuring under the Common Framework” and “Following-up on the Lessons Learned from the First Common Framework Cases”, and Fact Sheets of Common Framework country cases.
  - IMF and World Bank Executive Boards advanced the comprehensive review of the Debt Sustainability Framework for Low-Income Countries (LIC-DSF) with two informal technical engagements in July and September 2025.
  - IMF policy paper on “The 4th Financing for Development Conference-Contribution of the IMF to the International Financing for Development Agenda” published in June 2025.
  - World Bank’s paper on WBG’s Contribution to the International Financing for Development Agenda published in March 2025.
  - World Bank staff published the “Radical Debt Transparency” report in June 2025.
  - IMF and World Bank staffs finalized a paper on “Debt Vulnerabilities in Low-Income Countries – Recent Developments and Trends“ in October 2025.
  - IMF paper “A Stocktaking of the Current International Architecture for Resolving Debt Involving Private Sector Creditors” discussed by the IMF Board in October 2025.
  - GSDR meetings and events included Technical Group meetings on June 18 and September 4, an Open Workshop on September 12, and Deputies meeting on September 26 to prepare GSDR Principals meeting on October 15.

### 1. Further improving restructuring processes — Progress and remaining challenges
- Significant progress in restructuring processes over the past 2-3 years; cases have progressed both under and outside the Common Framework (CF).
- Lessons from early CF implementation produced positive spillovers for non-CF cases.
- A one-stop Compendium of Common Understanding on Technical Issues compiled consensus on topics from comparability of treatment (CoT) to expected timelines, domestic debt restructuring approaches, and state-contingent debt instruments (SCDIs).
- Persistent difficulties:
  - predictability and timeliness need further strengthening;
  - acceleration of restructuring non-bonded commercial debt;
  - incentivizing parallel rather than sequential negotiations when aligned with the debtor’s strategy;
  - supporting early post-restructuring credit rating upgrade.
- Complex topics needing more discussion include treatment of commercial collateralized financing and commercial loans backed by export-credit agencies (ECAs).
- Need to strengthen debt transparency, including disclosure of restructuring outcomes.

- Key technical advances since April:
  - Information-sharing:
    - Early and continuous information-sharing among debtor, creditor groups (OCC, bondholders committees), IMF and World Bank identified as key to timely and efficient restructurings.
    - Support reaffirmed for a debtor-convened meeting of all official bilateral and private creditors very early in the process.
    - IMF and World Bank can share macroeconomic frameworks and debt sustainability analysis, consistent with information-sharing policies, and explain IMF debt and financing assurances policies and World Bank requirements for financing through budget support operations.
    - Enhanced information-sharing helps accelerate restructuring of non-bonded commercial debt.
    - Early engagement with CRAs, including updating them on actual restructuring progress, can support early post-restructuring credit rating upgrades.

  - Restructuring of non-bonded commercial debt:
    - No obvious coordination mechanism exists for these creditors, unlike for official bilateral creditors and bondholders.
    - “London Clubs” are not used any more; proposed use of “Majority Voting Provisions” (MVPs) would apply only to syndicated loans and has not been taken up.
    - Support for public GSDR messaging to raise awareness among debtors and private creditors on early engagement for non-bonded commercial debt restructuring.
    - Recommendation: Debtors should ensure initial contracts with debt advisors extend to non-bonded debt; private creditor associations/coalitions should raise awareness among members about early engagement.
    - Further refinement of rules on how CoT could apply to residual non-bonded creditors could help accelerate restructurings; different views expressed.

  - Implementation of bilateral agreements following OCC MOUs:
    - Protracted timelines observed when moving from OCC MOUs to actual bilateral agreements; timely implementation is warranted.
    - OCCs and/or debtors could publish timetables with regular updates on signature status of bilateral agreements to incentivize earlier progress and identify potential issues.

  - Post-restructuring credit rating upgrades:
    - June exchanges with the three major CRAs clarified methodologies: ratings are case-by-case and judgmental; no strict quantified metric is possible.
    - Key factors triggering or delaying upgrades include the size and complexity associated with not-yet restructured debt.
    - An upgrade can occur with a share of not-yet restructured debt provided that such debt does not prevent the country from remaining current on new post-restructuring obligations.
    - Recent post-restructuring upgrades (e.g., Ghana) included a share of not-yet restructured debt in the range of 5-10 percent.

  - Classification of claims:
    - IMF staff background note on classification of official bilateral vs commercial claims welcomed.
    - The Fund uses a claim-by-claim analysis for Fund policies; Paris Club and CF OCCs often use an institution-by-institution approach for efficiency.
    - Close alignment between Paris Club/CF practice and the Fund’s definition has benefits but exact one-to-one mapping is not necessary.

  - Comparability of treatment (CoT):
    - Significant experience now exists implementing CoT under the CF.
    - Growing support, but not yet full consensus, on:
      - Earlier and more comprehensive publication by OCCs of key terms of the agreement in principle once reached, notably publishing the NPV reduction as soon as the agreement is reached to facilitate CoT implementation vis-à-vis other creditors.
      - Refinements on how CoT should be implemented for non-bonded commercial creditors to avoid unnecessary rigidities and burdens when residual creditors are marginal.
    - Differences of views remain on both issues.

  - Restructuring Playbook:
    - Confirmed usefulness; agreed to update on a 12-month basis to reflect further progress while avoiding too many versions with limited adjustments.

### 2. Stepping up support for countries with sustainable debt but high debt service challenges — Focus areas and findings
- GSDR discussions on the IMF–World Bank 3-pillar approach since April focused on incentivizing higher inflows from private creditors and conditions under which debt swaps and debt buybacks can be effective.
- Incentivizing private inflows is closely linked to domestic reforms, including stronger transparency and debtor/investor relations.
- Extensive discussion since 2024 on liability management operations (LMOs) and how CRAs assess these operations and implications for market access.
- Work since April anchored the importance of domestic reforms to incentivize higher private inflows and shared informal good practices.

- LMOs and related considerations:
  - CRA assessment:
    - CRAs reconfirmed criteria to classify debt distressed exchanges (DDEs), focusing on (i) whether investors receive less with the new instrument than promised under the initial contract; and (ii) whether the exchange was undertaken to avoid a default.
  - LMOs as a tool to ease liquidity constraints:
    - LMOs not appropriate in all circumstances, but well-designed, voluntary LMOs can help reduce short-term liquidity constraints and create fiscal space for growth-enhancing spending and growth dynamics.
    - Higher growth would improve medium-term debt ratios.
    - Effectiveness is country-specific and hinges on careful structuring and transparent execution.
    - Participants supported publication of practical guidance to help authorities navigate complex transactions and credit-enhancement structures, similar to IMF/World Bank note on “Debt for Development Swaps” published in July 2024.
  - Credit enhancements and NPV considerations:
    - While NPV-neutrality remains the benchmark for voluntary LMOs, exceptions may arise depending on instrument design and macro-fiscal context.
    - World Bank staff note on debt for education swap in Cote d’Ivoire was appreciated.
  - Communication and standardization:
    - Importance of early and proactive communication with CRAs and the market stressed.
    - Standardized frameworks, especially for innovative instruments such as partial guarantees, would facilitate execution and predictable treatment, underpinning early post-operation rating decisions.
  - Outcome:
    - High interest and support confirmed for publication of “how to notes” on LMOs, including use of credit enhancement, to provide practical steps and clear guidance.

### 3. Building resilience and strengthening transparency — Progress, gaps, and digital tools
- Debt transparency identified as a key driver of resilience and prevention of unsustainable debt build-up.
- Progress in recent years includes strengthened legal frameworks, improved debt recording and dissemination, higher data quality and standards, upgraded IT systems, and enhanced reporting practices.
- Significant remaining gaps: perimeter of countries improving debt data accuracy and disclosure and extent of data covered by debt transparency efforts.

- Data reconciliation and digital tools:
  - Importance emphasized that debtor’s books should match creditor records.
  - Debt transparency primarily the borrowing country authorities’ responsibility, but creditors have a role in reconciling creditor and borrower data.
  - Loan-by-loan reconciliation can deliver gains, but gaps persist; improvements in timeliness and quality of data reporting and publication warranted.
  - Undisclosed collateralized debt obligations pose important risks for debtor and creditors.
  - Broad support, but not yet full consensus, for the World Bank’s proposal to extend its debtor/creditor data reconciliation initiative to all G20 creditors.

  - Digital loan reconciliation platform (Loan Reconciliation Platform, LRP):
    - Proposed LRP acts as a platform for information sharing between creditors and debtors’ debt systems using standardized templates for each transaction.
    - For each new transaction (new loan signed, payment, disbursement, modification), the originator creates a new data file electronically transmitted to the LRP and the counterpart validates the information.
    - Access to individual loan data restricted to the respective borrower and creditor; the LRP will generate only aggregated statistics.
    - Benefits listed include facilitating secure debtor/creditor data exchanges, automating data recording, creating a repository of validated data, contributing to real-time statistics, serving as a debt data repository for unsophisticated/fragile LICs, and replacing manual reconciliations.
    - WB pilot project in Indonesia:
      - Funded by the Japanese MOF.
      - In its first phase (2025-Q1 2026), it covers Indonesia’s largest creditors - World Bank, JICA, Asian Development Bank - to later include a wider group of official creditors.
      - Links allowing the debt office to automatically transfer WB’s loan data into a local server – for their validation and automatic upload into the local DMRS - are already active.
    - Contextual statistic: Over 20 LICs currently do not disclose any debt data to the public; some of them also do not report regularly to WB’s DRS or/and there are major issues such as missing or unidentifiable loan numbers or various inconsistencies with the reported data.

- Institutional and capacity building measures:
  - Strengthening debt management frameworks and offices and building debtor/investor relations remains crucial to foster confidence and incentivize private inflows.
  - Strengthening domestic legal and operational frameworks is essential.
  - Multilateral and bilateral partners should continue supporting these efforts through technical assistance and capacity building, including via the Debt Management Facility implemented jointly by the World Bank and the IMF.
  - Outcome: Broad support, but not yet full consensus, confirmed for expanding the World Bank’s Debt Data Sharing Exercise to all G20 creditors.

### Next Steps for GSDR Work (selected)
- Improving further debt restructuring processes — targeted work could include:
  - Advancing identification of ways to accelerate restructuring of non-bonded commercial debt and leveraging private sector reflections.
  - Advancing reflection on how CoT is applied to non-bonded commercial creditors.
  - Deepening clarification of how official bilateral creditors classify and handle claims in a restructuring, including debt owed by state-owned enterprises, collateralized debt, private loans backed by an insurer or an export-credit agency; a workshop could be organized.
  - Identifying elements to add in the April 2026 updated “Restructuring Playbook”, including “good practices” to accelerate restructuring of non-bonded debt and support timely post-restructuring credit rating upgrade; adding a glossary of commonly used terms could be considered.

- Accelerating support to countries with sustainable debt but high debt service challenges:
  - Further practical guidance, including publication of “how-to” notes as appropriate, to help country authorities considering LMOs, including those using credit enhancement.
  - Further engagement with the G20 to advance the collective effort to support countries with sustainable debt but high debt service challenges.

- Building resilience and strengthening transparency — follow-up work could include:
  - Workshops with borrowing countries and preparation of “good practices” notes.
  - Follow-up on status of implementation of projects such as the World Bank’s debtor/creditor debt data sharing exercise and digital real time loan reconciliation system.
  - Renewed attention to collateralized financing practices, increasing transparency in that field, and raising borrowers’ awareness of risks involved.

*Source: 101525-gsdr-cochairs-progress-report — Executive Summary and subsequent sections.*

### Executive Summary

### 101525-gsdr-cochairs-progress-report - Executive Summary

### Debt vulnerabilities: current assessment
- Debt vulnerabilities remain elevated, in particular in low-income countries (LICs), requiring continued coordinated efforts.
- Overall assessment remains similar to April.
- On average, debt levels in low-income countries (LICs) and emerging markets (EMs) have stabilized and are expected to remain stable or decline slightly over the medium term for both LICs and EMs.
- Debt levels remain higher than pre-COVID, with a few countries particularly vulnerable.
- Many countries, particularly among LICs, face elevated debt-service challenges.
- While their debt is sustainable, high interest costs or/and refinancing needs crowd out space for development spending such as education, health, and infrastructure investment.
- Recent shifts in global policies and cuts in foreign aid add to the challenges, increasing the premium on domestic reforms to:
  - enhance growth and foster resilience,
  - mobilize resources,
  - improve transparency and debtor/investor relations.
- Specific attention to rising domestic debt vulnerabilities is warranted.

### Priority actions called for
- Further improving restructuring processes, including under the Common Framework, to ensure countries with unsustainable debt have access to timely and adequate debt treatments.
- Stepping up support for countries with sustainable debt but high debt-service challenges; the IMF–World Bank “three-pillar approach” provides the conceptual framework for that support.
- Building resilience and preventing unsustainable build-up of debt by accelerating progress on debt transparency, debt management, and debtor/investor relations.

### GSDR progress since April 2025
- Most ongoing debt restructuring cases have moved toward completion, both under the Common Framework and outside.
- GSDR technical work focused on:
  - Accelerating restructuring of non-bonded commercial debt and supporting early post-restructuring credit rating upgrade.
  - Helping countries with sustainable debt but high debt service challenges, including clarification on when and how liability management operations (LMOs) and credit enhancements can be effective tools.
  - Concrete actions to strengthen the accuracy and timeliness of debt data.
- Practical solutions to foster early and continuous information-sharing across stakeholders to accelerate processes, including:
  - The idea of a debtor-convened meeting of all official bilateral and private creditors very early in the process to explain context and goals of the restructuring, to facilitate parallel rather than sequential negotiations when consistent with the debtor’s strategy.
  - Encouragement for debtors and non-bonded commercial creditors to start engaging early to mitigate risks of multiple and potentially protracted processes.
- Broad support, but not yet full consensus, on earlier and more comprehensive publication by official creditor committees (OCCs) of key restructuring terms (including reduction in net present value) once an agreement is reached, to facilitate comparability of treatment (CoT).
- Support for publishing timetables, with regular updates, on status of signature of bilateral agreements implementing the memorandum of understanding (MOU) between OCC and the debtor.

### Support for countries with sustainable debt but high debt service challenges
- GSDR work clarified when and how LMOs, including those with credit enhancements, can be effective tools.
- Previous discussions deepened understanding of how credit rating agencies (CRAs) assess debt swaps and debt buybacks and implications for market access.
- Parallel work underscored the critical importance of domestic reforms to incentivize higher inflows from private creditors, including stronger transparency and debtor/investor relations.
- Interest and support for publication of practical “how-to” notes on LMOs, including those with credit enhancements, with concrete examples to help authorities understand when and how these instruments can be used effectively.
- This GSDR work would complement progress in other fora, including at the G20, on how bilateral, multilateral, and private partners can support these countries.

### Debt transparency work
- GSDR focused on concrete actions to strengthen accuracy and timeliness of debt data.
- Broad support, but not yet full consensus, for expanding to all G20 creditors the World Bank’s Debt Data Sharing Exercise by which debtor and creditors ensure the data in their respective books are “reconciled”.
- Strong interest in the World Bank’s proposal for a digital platform to automate loan data reconciliation, building on the pilot launched with Indonesia.

### Near-term deliverables and next steps supported by GSDR Principals
- Improving further debt restructuring processes, including targeted work on non-bonded commercial debt, deepened clarification of how claims are classified and handled in a restructuring, and further reflection on how CoT is applied to non-bonded commercial creditors; progress since April 2025 will be reflected in an updated “Restructuring Playbook” to be published in April 2026.
- Accelerating support to countries with sustainable debt but high debt service challenges, possibly including the publication of “how-to” notes, and further engagement with the G20.
- Building resilience and strengthening debt transparency, including follow-up work to support enhanced debt transparency, debt management, and debtor/investor relations; follow-up on implementation of the World Bank’s debtor/creditor debt data sharing exercise and digital real time loan reconciliation system; renewed attention to collateralized financing practices, increasing transparency in that field, and raising borrowers’ awareness of risks involved.

### Status update on specific restructuring cases (high-level)
- Ongoing restructurings continued to progress since April 2025 under the Common Framework (Ethiopia, Ghana, Zambia) and outside (Sri Lanka, Suriname).
- Country-specific progress highlights:
  - Ethiopia: finalized the memorandum of understanding (MOU) with the Official Creditor Committee (OCC) in July 2025 and completed in parallel the 3rd review of its Fund-supported program; next steps include signature of bilateral agreements consistent with the MOU; negotiations with bondholders ongoing.
  - Ghana: completed over 95% of its debt treatment; continues to negotiate with residual non-bonded commercial creditors; completed the 4th review of its Fund-supported program in July 2025; as of end-September, four bilateral agreements signed and remaining ones being negotiated.
  - Zambia: close to full completion with 94% of required debt treatment agreed; last step involves a small group of non-bonded commercial creditors; signature of bilateral agreements ongoing; completed the 5th review of its Fund-supported program in July 2025; as of end-September, four bilateral agreements signed and remaining ones being negotiated.
  - Sri Lanka: nearly complete; completed the 4th review of its Fund-supported program in July 2025; six agreements signed with official bilateral creditors and remaining ones being negotiated; good faith negotiations continue with remaining commercial creditors.
  - Suriname: nearly completed and finalizing discussion with one remaining commercial creditor; completed bilateral agreements with all official creditors; completed the final (9th) review of its Fund-supported program in March 2025.

### GSDR and related policy work since April 2025
- G20 published notes in June 2025: “Steps of a debt restructuring under the Common Framework” and “Following-up on the Lessons Learned from the First Common Framework Cases”, and Fact Sheets of Common Framework country cases.
- IMF and World Bank Executive Boards advanced the comprehensive review of the Debt Sustainability Framework for Low-Income Countries (LIC-DSF) with two informal technical engagements in July and September 2025.
- IMF published a policy paper on “The 4th Financing for Development Conference-Contribution of the IMF to the International Financing for Development Agenda” in June 2025, discussing debt vulnerabilities and proposals to address them.
- World Bank’s paper on WBG’s Contribution to the International Financing for Development Agenda published in March 2025.
- World Bank staff published the “Radical Debt Transparency” report in June 2025.
- IMF and World Bank staffs finalized a paper on “Debt Vulnerabilities in Low-Income Countries – Recent Developments and Trends“ in October 2025.
- An IMF paper “A Stocktaking of the Current International Architecture for Resolving Debt Involving Private Sector Creditors” was discussed by the IMF Board in October 2025.
- GSDR meetings and events:
  - GSDR Technical Group meeting on June 18 to identify ways to improve restructuring processes for non-bonded commercial debt and to facilitate post-restructuring credit rating upgrades; discussed classification of official bilateral vs. commercial claims.
  - GSDR Technical Group meeting on September 4 to foster consensus on debt transparency, facilitate LMOs under the IMF–World Bank “three pillar approach”, and advance issues from June.
  - GSDR Open Workshop on September 12 to take stock of progress, identify bottlenecks, and suggest priorities; included GSDR members, G20 members, Paris Club members, private creditors, borrowers, MDBs, CSOs, CRAs, advisory firms, and debt experts.
  - GSDR Deputies met on September 26 to review and advance technical work and prepare GSDR Principals meeting on October 15.

*Source: 101525-gsdr-cochairs-progress-report - Executive Summary.*

### 1.    Further improving restructuring processes

### 1.    Further improving restructuring processes

### Progress and remaining challenges
- Significant progress in restructuring processes over the past 2-3 years; cases have progressed both under and outside the Common Framework (CF).
- Lessons drawn from early CF implementation have produced positive spillovers for non-CF cases.
- Consensus at the GSDR on key technical issues compiled in a one-stop Compendium of Common Understanding on Technical Issues covering topics from comparability of treatment (CoT) to expected timelines, domestic debt restructuring approaches, and state-contingent debt instruments (SCDIs).
- Persistent difficulties: predictability and timeliness need further strengthening; acceleration of restructuring non-bonded commercial debt, incentivizing parallel rather than sequential negotiations when aligned with the debtor’s strategy, and supporting early post-restructuring credit rating upgrade require further progress.
- Complex topics needing more discussion and clarification include treatment of commercial collateralized financing and commercial loans backed by export-credit agencies (ECAs).
- Need to strengthen debt transparency, including disclosure of restructuring outcomes.

### GSDR technical work since April — key advances
- Further enhancing information-sharing across stakeholders:
  - Early and continuous information-sharing among the restructuring debtor, different creditor groups (OCC, bondholders committees etc.), and the IMF and World Bank identified as key to timely and efficient restructurings.
  - Support reaffirmed for a debtor-convened meeting of all official bilateral and private creditors very early in the process to explain context and goals and to facilitate subsequent information-sharing.
  - Such meetings provide opportunities for IMF and World Bank to share macroeconomic framework and debt sustainability analysis, consistent with policies on information sharing, and to explain IMF debt and financing assurances policies and World Bank requirements for financing through budget support operations.
  - Enhanced information-sharing helps accelerate restructuring of non-bonded commercial debt.
  - Early and continuous engagement with CRAs, including updating them on actual restructuring progress, can support early post-restructuring credit rating upgrades.

- Restructuring of non-bonded commercial debt:
  - No obvious coordination mechanism exists for these creditors, unlike for official bilateral creditors and bondholders.
  - “London Clubs” are not used any more; proposed use of “Majority Voting Provisions” (MVPs) has not been taken up and would apply only to syndicated loans.
  - Participants look forward to updates on private sector reflections (IIF, London Coalition).
  - Support for public GSDR messaging to raise awareness among debtors and private creditors on early engagement for non-bonded commercial debt restructuring.
  - Recommendation: Debtors should ensure initial contracts with debt advisors extend to non-bonded debt; private creditor associations/coalitions should raise awareness among members about early engagement.
  - Refining rules on how CoT could apply to residual non-bonded creditors could help accelerate restructurings; further work warranted and different views were expressed.

- Implementation of bilateral agreements following OCC MOUs:
  - Protracted timelines observed when moving from OCC MOUs to actual bilateral agreements.
  - Timely implementation is warranted.
  - OCCs and/or debtors could publish timetables with regular updates on the status of signature of bilateral agreements to incentivize earlier progress and identify potential issues.

- Post-restructuring credit rating upgrades:
  - June exchanges with representatives of the three major CRAs clarified methodologies: ratings are case-by-case and judgmental; no strict quantified metric is possible.
  - Key factors triggering or delaying upgrades include the size and complexity associated with not-yet restructured debt.
  - An upgrade can occur with a share of not-yet restructured debt provided that such debt does not prevent the country from remaining current on new post-restructuring obligations.
  - Importance of sharing information and data with CRAs, including debt composition and status of negotiations.
  - Recent post-restructuring upgrades (e.g., Ghana) included a share of not-yet restructured debt in the range of 5-10 percent.

- Classification of claims:
  - IMF staff background note on classification of official bilateral vs commercial claims welcomed.
  - Clarification: the Fund’s classification of claims for its purposes does not determine their treatment in a restructuring.
  - The Fund uses a claim-by-claim analysis for Fund policies; Paris Club and CF OCCs often use an institution-by-institution approach for efficiency.
  - Close alignment between Paris Club/CF practice and the Fund’s definition has benefits but exact one-to-one mapping is not necessary; past differences on the margins have not caused material complication.
  - Participants look forward to deepening understanding of situations involving export-credit agencies and to further clarification by official bilateral creditors on the perimeter of lenders granted preferred creditor status.

- Comparability of treatment (CoT):
  - Significant experience now exists implementing CoT under the CF.
  - Growing support, but not yet full consensus, on:
    - Earlier and more comprehensive publication by OCCs of key terms of the agreement in principle once reached, notably publishing the NPV reduction as soon as the agreement is reached to facilitate CoT implementation vis-à-vis other creditors.
    - Refinements on how CoT should be implemented for non-bonded commercial creditors to avoid unnecessary rigidities and burdens when residual creditors are marginal.
  - Differences of views remain on both issues.

- Restructuring Playbook:
  - Discussions confirmed usefulness of the “Restructuring Playbook”; agreed to update on a 12-month basis to reflect further progress while avoiding too many versions with limited adjustments between versions.

---

### 2.    Stepping up support for countries with sustainable debt but high debt service challenges

### Focus areas and findings
- GSDR discussions on the 3-pillar approach since April focused on incentivizing higher inflows from private creditors and conditions under which debt swaps and debt buybacks can be effective.
- The incentivizing of private inflows is closely linked to domestic reforms, including stronger transparency and debtor/investor relations.
- Extensive discussion since 2024 on liability management operations (LMOs) and how CRAs assess these operations and implications for market access.
- Work since April helped anchor the importance of domestic reforms to incentivize higher private inflows and shared informal good practices.

### LMOs and related considerations
- CRA assessment:
  - CRAs reconfirmed criteria to classify debt distressed exchanges (DDEs), focusing on (i) whether investors receive less with the new instrument than promised under the initial contract; and (ii) whether the exchange was undertaken to avoid a default.

- LMOs as a tool to ease liquidity constraints:
  - LMOs not appropriate in all circumstances, but well-designed, voluntary LMOs can help reduce short-term liquidity constraints and create fiscal space for growth-enhancing spending and growth dynamics.
  - Higher growth would improve medium-term debt ratios.
  - Effectiveness is country-specific and hinges on careful structuring and transparent execution.
  - Participants supported publication of practical guidance to help authorities navigate complex transactions and credit-enhancement structures, similar to IMF/World Bank note on “Debt for Development Swaps” published in July 2024.

- Credit enhancements and NPV considerations:
  - While NPV-neutrality remains the benchmark for voluntary LMOs, exceptions may arise depending on instrument design and macro-fiscal context.
  - World Bank staff note on debt for education swap in Cote d’Ivoire was appreciated.

- Communication and standardization:
  - Importance of early and proactive communication with CRAs and the market stressed.
  - Standardized frameworks, especially for innovative instruments such as partial guarantees, would facilitate execution and predictable treatment, underpinning early post-operation rating decisions.

- Outcome:
  - High interest and support confirmed for publication of “how to notes” on LMOs, including use of credit enhancement, to provide practical steps and clear guidance.

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### 3.    Building resilience and preventing unsustainable build-up of debt

### Debt transparency: progress and gaps
- Since April, GSDR work deepened focus on debt transparency as a key driver of resilience and prevention of unsustainable debt build-up.
- Some progress in recent years: strengthened legal frameworks, improved debt recording and dissemination, higher data quality and standards, upgraded IT systems, and enhanced reporting practices.
- Significant remaining gaps: perimeter of countries improving debt data accuracy and disclosure and extent of data covered by debt transparency efforts.

### Data reconciliation and digital tools
- Data reconciliation:
  - Importance of accurate debt data emphasized: debtor’s books should match creditor records.
  - Debt transparency primarily the borrowing country authorities’ responsibility, but creditors have a role in reconciling creditor and borrower data.
  - Loan-by-loan reconciliation can deliver gains, but gaps persist; improvements in timeliness and quality of data reporting and publication warranted.
  - Undisclosed collateralized debt obligations pose important risks for debtor and creditors.
  - Broad support, but not yet full consensus, for the World Bank’s proposal to extend its debtor/creditor data reconciliation initiative to all G20 creditors.

- Digital loan reconciliation platform:
  - Automated debt data reconciliation would reduce administrative burden for debtor countries and provide more recent data, for instance through the World Bank’s Debtor Reporting System (DRS).
  - Strong interest expressed in the World Bank’s proposal for a digital platform building on the pilot launched with Indonesia.

### Institutional and capacity building measures
- Strengthening debt management frameworks and offices and building debtor/investor relations remains crucial to foster confidence and incentivize private inflows.
- Strengthening domestic legal and operational frameworks is essential.
- Multilateral and bilateral partners should continue supporting these efforts through technical assistance and capacity building, including via the Debt Management Facility implemented jointly by the World Bank and the IMF.

- Outcome:
  - Broad support, but not yet full consensus, confirmed for expanding the World Bank’s Debt Data Sharing Exercise to all G20 creditors.

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### Section 3: Next Steps for GSDR Work

- Improving further debt restructuring processes — potential targeted work:
  - Advancing identification of ways to accelerate restructuring of non-bonded commercial debt, building on recent progress and leveraging private sector reflections.
  - Advancing reflection on how CoT is applied to non-bonded commercial creditors.
  - Deepening clarification of how official bilateral creditors classify and handle claims in a restructuring, including debt owed by state-owned enterprises, collateralized debt, private loans backed by an insurer or an export-credit agency, among others; a workshop could be organized on these issues.
  - Identifying elements to add in the April 2026 updated “Restructuring Playbook”, including “good practices” to accelerate restructuring of non-bonded debt and support timely post-restructuring credit rating upgrade; adding a glossary of commonly used terms in a restructuring context could also be considered.

- Accelerating support to countries with sustainable debt but high debt service challenges:
  - Further practical guidance, including publication of “how-to” notes as appropriate, to help country authorities considering LMOs, including those using credit enhancement.
  - Further engagement with the G20 to advance the collective effort to support countries with sustainable debt but high debt service challenges.

*Source: 101525-gsdr-cochairs-progress-report — 1. Further improving restructuring processes*

### 3.    Building  resilience  and  strengthening  transparency. This  could  include  follow-up  work  to

### 3.    Building  resilience  and  strengthening  transparency

### Follow-up work to support enhanced debt transparency, debt management, and debtor/investor relations
- Could include workshops with borrowing countries and the preparation of “good practices” notes.
- Could include follow-up on the status of implementation of projects such as:
  - the World Bank’s debtor/creditor debt data sharing exercise; and
  - digital real time loan reconciliation system.
- Renewed attention could be given to collateralized financing practices, including:
  - the importance of increasing transparency in that field; and
  - raising borrowers’ awareness of risks involved in this type of transactions.

### Background Note from IMF staff: Classification of Official Bilateral vs Private/Commercial Claims
- Objective: ensure the distinction between official bilateral and private/commercial claims is well understood by all participants, particularly in the context of a debt restructuring.
- The IMF has a clear framework for making such a determination for the purpose of Fund lending, typically where there are arrears.
- Official bilateral creditors have their own procedures (e.g., for a Paris Club or Common Framework (CF) treatment) which most often overlap with the IMF’s classification, but not as a requirement.
- Close alignment between Paris Club/CF practice and the Fund’s definition brings benefits, but exact one-to-one mapping is not necessary; treatment has differed on the margins in the past without material complications.
- The perimeter of a debt restructuring to restore debt sustainability is set by the debtor at the advice of its legal and financial counsel.
- The IMF and the official bilateral creditor community each have their own procedures for determining official bilateral claims, which overlap.
- When determining whether arrears are “sovereign”, the IMF considers whether the entity’s financial operations form part of the government’s budgetary process.
- Claims:
  - Claims on a borrowing entity within a government’s budgetary process, and held by a lending entity within a government’s budgetary process, are considered official bilateral.
  - Claims held by entities outside the government’s budgetary process may still be considered Direct Bilateral Claims if they were extended or contracted or guaranteed by or on behalf of the government.
- Determination process:
  - Done by the IMF’s Executive Board on the advice of staff and management taking into account the totality of circumstances.
  - Defers to the creditor’s representations, although these representations can be challenged.
- International financial institutions (IFIs):
  - Defined as having two or more sovereign members and no non-sovereign members.
  - Institutions with mixed (sovereign/private) membership are treated for IMF policy purposes under the same policy as private/commercial creditors.
  - The IMF’s treatment of an IFI under its non-toleration policy is a reflection, not a cause, of preferred creditor status of an IFI.
  - The IMF considers five criteria for the treatment of an IFI under its non-toleration policy, and is informed crucially by the views of the creditor community on preferred creditor status when it comes to IFIs without global membership which are not Regional Financing Arrangements.
- The Fund’s classification of claims for its purposes does not determine their treatment in a restructuring; the arrears policies are internal policies for the Fund’s operations and are not intended to drive the negotiation process nor to influence the policies of official bilateral or other creditors.
- Paris Club/CF practice:
  - While the Fund uses a claim-by-claim analysis to determine classification of claims for purposes of Fund policies, for efficiency reasons the Paris Club and CF Official Creditor Committees (OCCs) often use an institution-by-institution approach to encompass a broader scope of claims in their treatments.
  - Close alignment with the Fund’s definition has benefits but exact one-to-one mapping is not necessary; past differences on the margins have not caused material complications.

### Official vs private restructurings and creditor coordination
- Official and private restructurings follow fundamentally different processes:
  - Primary objective of official restructurings: find a solution based on a fair burden sharing among creditors, where particular contractual features play a secondary role.
  - Official creditor coordination mechanisms (Paris Club, Common Framework, or informal coordination) anchor negotiations in ongoing relationships among creditors and with the debtor; the “repeated game” aspect implies the will to find a solution is more important than particular contractual features.
  - Primary objective (and mandate) of private creditors: maximize their recovery value, with contractual features playing a key role in the eventual outcome.
- For restructurings to work well, both groups need to understand the constraints under which the other operates.

### Loans guaranteed by export-credit agencies (ECAs)
- ECAs can lead to complex classification analyses because:
  - some ECAs are considered private/commercial while others are considered official; and
  - practices vary across agencies on how guarantees/indemnifications are delivered.
- Operational differences in practice:
  - Some ECAs can accelerate commercial banks’ claims at the event of the first default on debt service, after which negotiation takes place between the ECA and the debtor.
  - In other cases, the commercial bank retains the original exposure and receives payments from the ECA as each debt service payment is missed.
- Exploring further the different situations encountered in practice could be pursued in follow up meetings or workshops.

### Background Note from World Bank staff: Automated Credit/Debtor Loan Data Reconciliation
- Current situation/problems:
  - Sovereign loan recording is currently performed manually, making it prone to errors and resulting in inconsistent or outdated data.
  - Reconciliation of borrower and creditor data is conducted manually, typically on an ad-hoc basis (e.g., during a debt restructuring).
  - Manual approach is time-consuming and fails to address root causes of misreporting as it focuses solely on stock data.
  - Manual recording by debtors and creditors results in duplication of efforts and operational risk.
  - Recording errors, different debt recording procedures and systems used by creditors and debtor generate costly and time-consuming exercises to reconcile creditor and debtor data for accurate and comprehensive reporting.
- Illustrative note: recording a loan agreement in the most widely used DMRS in LICs (UNCTAD’s DMFAS and COMSEC’s Meridian) requires filling out a minimum of 20 mandatory data fields (numerical and alphanumerical).
- Example issues: delays in data recording, misinterpretation of loan terms, misaligned computation method, different parameters (FX, SOFR, etc.).
- Proposed solution: Loan Reconciliation Platform (LRP)
  - LRP acts as a platform for information sharing between creditors and debtors’ debt systems.
  - Creditors and borrowers connect to the LRP through a dedicated client connection system to transfer or receive digital information related to loan contracts and related transactions.
  - For each new transaction (new loan signed, payment, disbursement, modification), the originator creates a new data file electronically transmitted to the LRP according to standardized templates.
  - The counterpart validates the information in the LRP and automatically transfers the data as needed into its own debt recording system.
  - Access to individual loan data restricted to the respective borrower and creditor; the LRP will generate only aggregated statistics.
- Benefits of an LRP:
  - facilitate secure debtor/creditor data exchanges on loan transactions;
  - automate data recording in debtor's debt recording systems and reduce operational risk;
  - create a repository of validated data on all loan transactions;
  - contribute to the compilation and dissemination of real-time statistics;
  - serve as a debt data repository for unsophisticated/fragile LICs by leveraging creditors’ records;
  - replace costly and time-consuming manual reconciliations, improving transparency and expediting debt restructurings.
- Comparison table (key differences):
  - Standard reconciliation vs Loan Reconciliation Platform:
    - What data are reconciled? Loan Stock vs Individual loan transactions (e.g. disbursements, payments)
    - When? At cut-off date vs On ongoing basis
    - By who? External agents (e.g., advisors, Paris Club, WB staffs) vs Relevant creditors / borrower
    - Borrower’s DMO role: Manual debt recording + filling of multiple Excel forms vs Validation of creditors’ inputs
    - Statistics time lag >1 year vs Real-time
- WB pilot project in Indonesia:
  - Funded by the Japanese MOF.
  - Is on-going.
  - In its first phase (2025-Q1 2026), it covers Indonesia’s largest creditors - World Bank, JICA, Asian Development Bank - to later include a wider group of official creditors.
  - Links allowing the debt office to automatically transfer WB’s loan data into a local server – for their validation and automatic upload into the local DMRS - are already active.
- Contextual statistic: Over 20 LICs currently do not disclose any debt data to the public; some of them also do not report regularly to WB’s DRS or/and there are major issues such as missing or unidentifiable loan numbers or various inconsistencies with the reported data.

*Source: IMF staff and World Bank staff background notes included in the progress report.*

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_Source: https://www.imf.org/-/media/files/about/faq/gsdr/101525-gsdr-cochairs-progress-report.pdf_