The Group of 20 developed countries has reaffirmed its support for having the private sector voluntarily disclose its loans to governments, an approach one critic branded “a laughing stock.”
The renewed G-20 backing comes despite the fact that the initiative, managed by the OECD, has attracted very few contributions from private sector lenders. (See Aug 11, 2022, EYE article.)
Since the poor showing was documented earlier this year, the initiative seems to have flagged.
There appeared to have been plans at OECD to revive the initiative, but the advisory committees have not met and an idea for holding a late-year meeting did not materialize.
An OECD official told EYE in October: “I unfortunately do not have much time to provide updates. Moreover, for the moment there are not any major updates on the DTI.”
DTI refers to the OECD Data Transparency Initiative, launched in March of 2021. An OECD report in March of 2022 revealed that only two banks had contributed data.
Nevertheless, G-20 leaders who met in Bali doubled down in the voluntary approach in a Nov. 16 statement.
Specifics of the Declarations Vary Slightly
The 2022 G-20 Declaration issued in Bali states:
We reaffirm the importance of joint efforts by all actors, including private creditors, to continue working toward enhancing debt transparency. We welcome the efforts of private sector lenders who have already contributed data to the joint Institute of International Finance (IIF)/OECD Data Repository Portal, and continue to encourage others to also contribute on a voluntary basis.
There are a few slight differences from the 2021 Declaration.
The latest G-20 statement
- More specifically encourages private sector lenders to provide data on a voluntary basis,
- Drops a reference to the World Bank and IMF, and
- Uses a new name for the collection portal, calling it “the joint Institute of International Finance (IIF)/OECD Data Repository Portal.”
The Institute of International Finance (IIF) is a business association that helped develop disclosure principles to be used by the private sector and the Organization for Economic Cooperation and Development (OECD), the Paris-based intergovernmental organization with 38 developed country members. IIF officials were contacted for comment, but did not reply.
The World Bank and the IMF have various programs designed to encourage debt transparency, mainly through helping borrowing countries, though evidence of their success is scant. (See Aug. 12, 2022, EYE analysis.)
The continuing lack of debt transparency was documented in a November 2021 World Bank report. Nearly 40 percent of the 74 Low-Income Developing Countries (LIDCs) studied “have never published debt data on their websites, or they have not updated their data in the last two years,” according to the report.
The 2021 G-20 Declaration said:
We affirm the importance of joint efforts by all actors, including private creditors, to continue working towards enhancing debt transparency. We look forward to progress by the IMF and World Bank Group on their proposal of a process to strengthen the quality and consistency of debt data and improve debt disclosure.
‘Laughing Stock’
Critics of the OECD initiative believe mandatory disclosure is necessary.
Tim Jones, Head of Policy at Debt Justice, a non-governmental organization, criticized the G-20 position in a Nov. 16 statement:
“The private sector’s voluntary disclosure of loan information has become a laughing stock. Lenders first committed to publish loan information in 2019. In the three years since, just two banks have made any disclosures. Banks have made it clear that as long as lending transparency is voluntary, it won’t happen. Governments have to make private lenders publish the details of their loans.”
