World financiers gather to prevent ‘higher-for-longer’ rates breaking the system

Sander Tordoir, from the Centre for European Reform, calculates that surging global interest rates mean that the IMF’s lending to debtor countries could be charged at rates as high as 8 per cent.

“In some cases the burden of paying high interest rates to the IMF is worsening rather than alleviating countries’ budgetary woes and hampering their prospects of economic recovery,” Tordoir said. He thinks that the fund should introduce a temporary cap on its lending rates to avoid imposing punishing costs on the world’s poorest countries.

A cap would also help to bolster the IMF’s faltering position as the world’s lender of last resort to nations who have been locked out of the financial market, while having the added benefit of deterring some countries from seeking bilateral loans from punitive creditors like China, he said.