Debt-heavy countries such as Zambia and Sri Lanka, which have turned to the International Monetary Fund (IMF) for bailouts, are facing unprecedented delays in bailouts as China and Western economies clash over how to alleviate their debt.

Funding from the IMF is often the only financial bailout available to countries in debt distress and is the key to unlocking other sources of funding. Any delay puts pressure on public finances, companies and the public.

In the case of Zambia, 271 days elapsed between the conclusion of the $1.3 billion deal with IMF staff (a preliminary financing agreement usually negotiated during a country visit) and the signing by the Fund’s executive board, which is a condition for actual disbursements. It was the first African country to default in the pandemic era in 2020, while other countries closely followed its ongoing debt relief talks with China as a model for IMF lending to emerging markets.

While staff-level agreements can be reached without funding guarantees, the IMF board needs them to approve the program. These are assurances that creditor governments and creditor banks, in turn, will agree on restructuring, according to the IMF’s debt sustainability analysis, providing assistance and financing when needed.

Sri Lanka has waited 182 days to complete its bailout following a $2.9 billion staff-level deal in September, while Ghana, which defaulted on its external debt in December following a preliminary deal with the IMF, is still not received board approval 80 days later. This compares to the average of 55 days for low- and middle-income countries to go from pre-agreement to signature over the past decade, according to publicly available data from more than 80 cases collected by Reuters.

These delays were due to a number of reasons, but debt analysts point to the fact that China remains unwilling to offer debt relief on comparable terms to other external creditors as the main factor.

“That’s one of the reasons these negotiations are going so painfully slowly,” said Kevin Gallagher, director of the Center for Global Development Policy at Boston University. “It’s not just the Paris Club and a few New York banks that are involved in this process.” Chinese Premier Li Keqiang said Wednesday that his country is ready to “constructively” engage in resolving the debt problems of its countries on a multilateral basis. However, Beijing has always stressed that all creditors must follow the principle of “joint action, fair burden” when repaying debt.