Question to the HM Treasury:

To ask Her Majesty's Government what steps they have taken to tackle the debt crises in low-income countries.

The UK recognises the significant debt vulnerabilities faced by many low-income countries, exacerbated by the Covid-19 pandemic. Support for low-income countries, including on debt, has been a key priority of the UK’s G7 Presidency this year and something we have worked closely on with our international partners in the G20.

At the onset of the pandemic the UK, along with the G20 and Paris Club members, agreed the Debt Service Suspension Initiative (DSSI). Under the DSSI, 73 low-income countries are eligible for temporary suspension of debt-service payments to bilateral creditors. The initiative has so far suspended over $10 billion in debt service repayments for over 40 low-income countries. The suspension period, initially agreed until December 2020 has been extended until December 2021.

We have also agreed with our G20 and Paris Club partners a new “Common Framework” for debt treatments. This brings together, for the first time, G20 and Paris Club creditors to coordinate and cooperate in debt treatments for DSSI eligible countries. Under the Common Framework, private creditors will be required to implement debt restructurings on at least as favourable terms as bilateral creditors.

The UK is also at the forefront of G7 initiatives on debt transparency, which is key to ensuring long-term debt sustainability. The UK secured G7 commitments to follow the UK in publishing their creditor portfolios “on a loan-by-loan basis for future direct lending by the end of 2021”. The G7 also urged all other G20 members to do the same.