Source: The Conversation – Africa – By Misheck Mutize, Post Doctoral Researcher, Graduate School of Business (GSB), University of Cape Town
The International Monetary Fund (IMF) should not be an arbiter of discussions about which other multilateral financial institutions should qualify for preferred creditor status. This is because the IMF is a direct beneficiary of the creditor hierarchy policy.
A preferred creditor status gives multilateral development institutions priority for the repayment of their loans should a borrower run into financial difficulties. This means preferred creditors have no non-performing loans on their balance sheets. This preserves their low-cost funding channels. Non-preferred creditors have high risk exposure and borrowing costs.
The events leading to Fitch Ratings’ downgrade in January 2026 of the African Export-Import Bank (Afreximbank) and the rating agency’s subsequent withdrawal of the bank’s ratings illustrate this IMF conflict.
Fitch acted on a statement by the IMF declaring that Afreximbank was not treated as a preferred creditor in the finalisation of Ghana’s debt restructuring.
The effect of the IMF’s statement was to throw into doubt Afreximbank’s preferred creditor status, which it qualifies for by convention and through its member shareholders.
The IMF’s interpretation was that the agreement between Ghana and Afreximbank was consistent with the comparability of treatment under the official creditors’ committee framework. Official creditors are governments, government agencies, or international organisations such as the IMF and the World Bank. Comparability of treatment is the principle that debtor countries must restructure all external debt on broadly equivalent terms. This is aimed at ensuring fairness and equal sharing of losses when a country defaults.
The official creditors committee was formed in terms of the G20 Common Framework for Debt Treatments. The framework was created by the G20 to enable low-income countries that have hit financial trouble to restructure their debts, working with creditors.
Based on my work on rating agencies and African countries, I argue that the IMF’s statement on Afreximbank should not have been treated as a fact. In addition, no attempt was made to verify the specific terms with Ghana or Afreximbank. Fitch admitted in its rating report that it did not have details of the loan terms.
And based on the same agreement between Ghana and Afreximbank, GCR, a subsidiary of Moody’s, took a different view, affirming Afreximbank’s globally comparable ratings. Most importantly, GCR revised the bank’s rating from “rating watch evolving” to stable, arguing that Afreximbank’s preferred creditor status was strong.
Despite the differences in interpretation of the agreement between Afreximbank and Ghana, the IMF statement triggered a chain reaction. Fitch Ratings first downgraded the bank’s rating and later completely withdrew its rating of the bank.
But beyond the technical jargon of debt restructuring lies a deeper, more troubling reality. The IMF is not a neutral arbiter on any discussions relating to preferred creditor status. It is itself a direct beneficiary of the very creditor hierarchy it is pushing to maintain as policy.
Ghana and Afreximbank agreement
In December 2025, Afreximbank and Ghana announced that they had reached an agreement on a US$750 million facility.
The details of the agreement were not disclosed. But both Ghana and Afreximbank said they were happy with it.
Afreximbank’s preferred creditor status is not just a matter of convention. It is granted to the bank by its member shareholders.
If Ghana had treated Afreximbank’s loan facility as commercial, it would have bundled it together with other commercial lenders in the restructuring. Eurobond holders, for example, took a nominal 37% reduction in the value of what they had lent Ghana.
The ‘baby multilateral’ prejudice
The Ghana-Afreximbank case is one example of how conflicted the Bretton Woods institutions – the IMF and the World Bank Group – are when they are engaging on matters of global financing. This conflict of interest is at the heart of key challenges bedevilling global financial governance.
The IMF, together with the Paris Club (an informal group of official creditors), has long treated African multilateral financial institutions such as Afreximbank as second-class entities.
Their associate economists have dismissively referred to African multilateral financial institutions as complicating debt restructuring by claiming to be preferred creditors. Analysts also prejudicially referenced African multilateral banks as “baby multilaterals” relative to the size of IMF and the World Bank.
They have strongly resisted any suggestion that African multilaterals should be accorded status equal to the World Bank or the IMF, or even that they should be allowed to use the term “multilateral” development banks.
But the opposite could be true. Small multilaterals need the preferred creditor status more than Bretton Woods institutions. This is because the status is a strategic advantage.
Concessional lending argument is flawed
The IMF’s justification for why African multilateral banks should be denied preferred creditor status often sounds reasonable on the surface. It suggests that this status should be reserved for institutions that lend on highly concessional terms, with long maturities and low interest rates.
By this logic, African multilaterals do not quality for the same protection because they lend at slightly higher interest rates relative to bigger institutions such as the World Bank and the IMF. But this argument is fundamentally flawed for two reasons.
First, preferred creditor status is not a reward for concessionality, it is a functional necessity for any multilateral lender that must recycle funds across multiple countries. The function of a multilateral development bank is to take wholesale risk so that its members do not have to. Size and concessionality – more favourable terms compared to commercial lenders – are not the criteria. Credibility and a developmental role are.
Second, if the IMF genuinely wanted African multilaterals to grow and lend at more concessional rates, it would have supported their access to resources. For example, through its quota system, the IMF constrained the 2021 reallocation of unused Special Drawing Rights that had been proposed for rechannelling to African multilateral financial institutions.
The Special Drawing Right is not a currency and derives its value based on a basket of currencies comprising the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.
Of the US$650 billion in available Special Drawing Rights, it imposed a limit of just US$15 billion for allocation across all multilateral development banks. The African Development Bank was the only African multilateral financial institution that accessed the Special Drawing Rights fund.
The argument was technical. But the effect was political – keep African institutions small and dependent, and then point to their small size as a reason to deny them equal status. That is not neutrality but gatekeeping.
What needs to change
The IMF demands that African multilaterals prove their creditworthiness without preferred creditor status, while the IMF itself would likely see its own credit rating downgraded if it were treated as a common creditor. The IMF enjoys preferred creditor status not because it is the largest or most concessional, but because the system has been designed to protect it. It can thus not credibly adjudicate on whether others deserve it.
This needs to change in the following ways.
First, the global financial architecture must confront legitimate issues affecting developing countries and their institutions with neutrality. Creditors should establish clear, transparent and consistent criteria for preferred creditor status that apply equally to all multilateral lenders across the globe.
Second, rating agencies must stop treating IMF statements as presumptively correct, especially when the IMF has a direct stake in the outcome.
Lastly, African governments and their multilateral banks must collectively challenge the “baby multilateral” narrative, not by begging for recognition but by building alternative mechanisms.
If this does not change, the global financial architecture will remain a a two-tier system with the World Bank, IMF and their associates at the top and African-led institutions holding the bottom.
– The IMF enjoys preferred creditor status: why it shouldn’t be the judge when it comes to other lenders
– https://theconversation.com/the-imf-enjoys-preferred-creditor-status-why-it-shouldnt-be-the-judge-when-it-comes-to-other-lenders-280509