The Worldwide Financial Fund (IMF) shouldn’t be an arbiter of discussions about which different multilateral monetary establishments ought to qualify for most well-liked creditor standing. It is because the IMF is a direct beneficiary of the creditor hierarchy coverage.
A most well-liked creditor standing offers multilateral improvement establishments precedence for the reimbursement of their loans ought to a borrower run into monetary difficulties. This implies most well-liked collectors don’t have any non-performing loans on their steadiness sheets. This preserves their low-cost funding channels. Non-preferred collectors have excessive threat publicity and borrowing prices.
The occasions resulting in Fitch Scores’ downgrade in January 2026 of the African Export-Import Financial institution (Afreximbank) and the ranking company’s subsequent withdrawal of the financial institution’s rankings illustrate this IMF battle.
Fitch acted on a press release by the IMF declaring that Afreximbank was not handled as a most well-liked creditor within the finalisation of Ghana’s debt restructuring.
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The impact of the IMF’s assertion was to throw into doubt Afreximbank’s most well-liked creditor standing, which it qualifies for by conference and thru its member shareholders.
The IMF’s interpretation was that the settlement between Ghana and Afreximbank was in keeping with the comparability of therapy below the official collectors’ committee framework. Official collectors are governments, authorities companies, or worldwide organisations such because the IMF and the World Financial institution. Comparability of therapy is the precept that debtor nations should restructure all exterior debt on broadly equal phrases. That is geared toward guaranteeing equity and equal sharing of losses when a rustic defaults.
The official collectors committee was fashioned when it comes to the G20 Widespread Framework for Debt Therapies. The framework was created by the G20 to allow low-income nations which have hit monetary bother to restructure their money owed, working with collectors.
Primarily based on my work on ranking companies and African nations, I argue that the IMF’s assertion on Afreximbank shouldn’t have been handled as a truth. As well as, no try was made to confirm the precise phrases with Ghana or Afreximbank. Fitch admitted in its ranking report that it didn’t have particulars of the mortgage phrases.
And primarily based on the identical settlement between Ghana and Afreximbank, GCR, a subsidiary of Moody’s, took a special view, affirming Afreximbank’s globally comparable rankings. Most significantly, GCR revised the financial institution’s ranking from “ranking watch evolving” to secure, arguing that Afreximbank’s most well-liked creditor standing was robust.
Regardless of the variations in interpretation of the settlement between Afreximbank and Ghana, the IMF assertion triggered a sequence response. Fitch Scores first downgraded the financial institution’s ranking and later fully withdrew its ranking of the financial institution.
However past the technical jargon of debt restructuring lies a deeper, extra troubling actuality. The IMF just isn’t a impartial arbiter on any discussions referring to most well-liked creditor standing. It’s itself a direct beneficiary of the very creditor hierarchy it’s pushing to keep up as coverage.
Ghana and Afreximbank settlement
In December 2025, Afreximbank and Ghana introduced that they’d reached an settlement on a US$750 million facility.
The main points of the settlement weren’t disclosed. However each Ghana and Afreximbank mentioned they have been proud of it.
Afreximbank’s most well-liked creditor standing isn’t just a matter of conference. It’s granted to the financial institution by its member shareholders.
If Ghana had handled Afreximbank’s mortgage facility as business, it could have bundled it along with different business lenders within the restructuring. Eurobond holders, for instance, took a nominal 37% discount within the worth of what they’d lent Ghana.
The ‘child multilateral’ prejudice
The Ghana-Afreximbank case is one instance of how conflicted the Bretton Woods establishments – the IMF and the World Financial institution Group – are when they’re partaking on issues of worldwide financing. This battle of curiosity is on the coronary heart of key challenges bedevilling international monetary governance.
The IMF, along with the Paris Membership (a casual group of official collectors), has lengthy handled African multilateral monetary establishments akin to Afreximbank as second-class entities.
Their affiliate economists have dismissively referred to African multilateral monetary establishments as complicating debt restructuring by claiming to be most well-liked collectors. Analysts additionally prejudicially referenced African multilateral banks as “child multilaterals” relative to the dimensions of IMF and the World Financial institution.
They’ve strongly resisted any suggestion that African multilaterals needs to be accorded standing equal to the World Financial institution or the IMF, and even that they need to be allowed to make use of the time period “multilateral” improvement banks.
However the reverse could possibly be true. Small multilaterals want the popular creditor standing greater than Bretton Woods establishments. It is because the standing is a strategic benefit.
Concessional lending argument is flawed
The IMF’s justification for why African multilateral banks needs to be denied most well-liked creditor standing typically sounds cheap on the floor. It means that this standing needs to be reserved for establishments that lend on extremely concessional phrases, with lengthy maturities and low rates of interest.
By this logic, African multilaterals don’t high quality for a similar safety as a result of they lend at barely greater rates of interest relative to greater establishments such because the World Financial institution and the IMF. However this argument is basically flawed for 2 causes.
First, most well-liked creditor standing just isn’t a reward for concessionality, it’s a practical necessity for any multilateral lender that should recycle funds throughout a number of nations. The perform of a multilateral improvement financial institution is to take wholesale threat in order that its members should not have to. Measurement and concessionality – extra beneficial phrases in comparison with business lenders – aren’t the standards. Credibility and a developmental function are.
Second, if the IMF genuinely needed African multilaterals to develop and lend at extra concessional charges, it could have supported their entry to assets. For instance, by its quota system, the IMF constrained the 2021 reallocation of unused Particular Drawing Rights that had been proposed for rechannelling to African multilateral monetary establishments.
The Particular Drawing Proper just isn’t a forex and derives its worth primarily based on a basket of currencies comprising the US greenback, the euro, the Chinese language renminbi, the Japanese yen, and the British pound sterling.
Of the US$650 billion in out there Particular Drawing Rights, it imposed a restrict of simply US$15 billion for allocation throughout all multilateral improvement banks. The African Growth Financial institution was the one African multilateral monetary establishment that accessed the Particular Drawing Rights fund.
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The argument was technical. However the impact was political – preserve African establishments small and dependent, after which level to their small measurement as a cause to disclaim them equal standing. That’s not neutrality however gatekeeping.
What wants to vary
The IMF calls for that African multilaterals show their creditworthiness with out most well-liked creditor standing, whereas the IMF itself would doubtless see its personal credit standing downgraded if it have been handled as a typical creditor. The IMF enjoys most well-liked creditor standing not as a result of it’s the largest or most concessional, however as a result of the system has been designed to guard it. It may well thus not credibly adjudicate on whether or not others deserve it.
This wants to vary within the following methods.
First, the worldwide monetary structure should confront authentic points affecting growing nations and their establishments with neutrality. Collectors ought to set up clear, clear and constant standards for most well-liked creditor standing that apply equally to all multilateral lenders throughout the globe.
Second, ranking companies should cease treating IMF statements as presumptively appropriate, particularly when the IMF has a direct stake within the final result.
Lastly, African governments and their multilateral banks should collectively problem the “child multilateral” narrative, not by begging for recognition however by constructing different mechanisms.
If this doesn’t change, the worldwide monetary structure will stay a a two-tier system with the World Financial institution, IMF and their associates on the high and African-led establishments holding the underside.
Misheck Mutize, Publish Doctoral Researcher, Graduate College of Enterprise (GSB), College of Cape City