Debts: Developing Countries

(asked on 8th October 2020) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what plans his Department has to work with international partners to extend the Debt Service Suspension Initiative beyond the end of 2020; and what plans he has to promote the inclusion of (a) private lenders and (b) multilateral institutions in that agreement.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 13th October 2020

To date, the Debt Service Suspension Initiative (DSSI) has supported 43 countries which have requested suspensions by freeing up $5 billion to fund their COVID-19 responses. Given the depth of liquidity needs in these countries, the Chancellor supports an extension of the DSSI into 2021 and is working with his G20 counterparts to secure agreement on the extension.

The G20 agreed private sector DSSI participation should be voluntary and at borrowers’ discretion. The Chancellor continues to support this approach, which helps protect these countries’ hard-won market access which will be essential for financing COVID recovery. Where borrowers do make requests, private creditors should implement the DSSI. Where sovereign debt reductions are necessary, it will be important for there to be fair and timely burden sharing between all creditor types, including commercial creditors.

The G20 has supported the Multilateral Development Banks taking a “net positive flows” approach to complement the DSSI, ensuring that borrowing countries receive significantly more funds from the MDBs in 2020 than they repay. For the poorest countries, much of this funding will be on grant terms. This helps ensure the financial model of the MDBs remains sustainable, while allowing donors to target resources to support the most vulnerable countries.

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