“The G20 Common Framework for debt treatments must be stepped up”, Kristalina Georgieva (Managing Director of the IMF) and Ceyla Pazarbasioglu (Deputy Director) argue in a blog post of the same name.
With the debt service suspension initiative expiring and interest rates poised to rise, low-income countries will find it increasingly difficult to service their debts, the text highlights at the beginning.
The two authors emphasize that the coming year will bring new challenges for many countries already suffering heavily from their debt burdens:
While COVID-related initiatives such as the G20 Debt Service Suspension Initiative (DSSI) are ending, the recent Omicron variant is a stark reminder that the pandemic is far from over. This makes it all the more important that the Common Framework for debt treatments is improved, they conclude.
Examples like Chad, Ethiopia, and Zambia – the only three countries that have resorted to it – show that “quick action is needed to build confidence in the framework and provide a road map for helping other countries facing increasing debt vulnerabilities.”
The DRGR-Project has long argued that the Common Framework is not working, and its most recent paper “Securing private-sector participation and securing policy space for Sustainable Development” is proposing remedies.