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9/25/2020

G7 Finance Ministers’ Statement on the Debt Service Suspension Initiative and Debt Relief for Vulnerable Countries | U…

G7 Finance Ministers’ Statement on the Debt Service Suspension
Initiative and Debt Relief for Vulnerable Countries
September 25, 2020

Washington – We remain committed to working together to support the poorest and most
vulnerable countries as they address health and economic challenges associated with
COVID-19. The pandemic has significantly disrupted global growth and necessitated
extraordinary fiscal policy e orts, exacerbating existing debt vulnerabilities in many lowincome countries. We commend the e orts of the international financial institutions (IFIs) to
rapidly scale up financial and technical assistance to these countries. We ask the IMF and
World Bank to update regularly assessments of the financing needs of low-income countries
in response to evolving circumstances with the impact of the pandemic and propose ways
for countries to cover expected financing gaps, including through instruments to leverage
access to private finance.
To support our e orts to help the most vulnerable countries, we are implementing the G20Paris Club Debt Service Suspension Initiative (DSSI) to suspend o icial bilateral debt
payments for the poorest countries through end-2020. The DSSI has been fundamental in
supporting the 43 countries that have requested the benefits of the initiative by freeing up $5
billion in fiscal space to fund social, health, and economic measures to respond to the
pandemic.
G20 and Paris Club o icial bilateral creditors are continuing to coordinate closely to provide
full and transparent relief under the DSSI. Nonetheless, DSSI implementation has faced
shortcomings that have prevented the initiative from delivering its full potential. In particular,
we strongly regret the decision by some countries to classify large state-owned,
government-controlled financial institutions as commercial lenders and not as o icial
bilateral creditors, without providing comparable treatment nor transparency, thus
significantly reducing the magnitude of the initiative and the benefits of the DSSI for
developing countries. Claims considered as commercial for the purpose of the DSSI will be
treated as commercial claims as well in future debt treatments, and for the implementation
of IMF policies. We call on non-Paris Club lenders to commit to full and transparent
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9/25/2020

G7 Finance Ministers’ Statement on the Debt Service Suspension Initiative and Debt Relief for Vulnerable Countries | U…

implementation of the DSSI through all government entities going forward. Additionally,
voluntary private sector participation has been absent, which has limited the potential
benefits for several countries. We reiterate our call for private creditors to implement the
DSSI on a voluntary basis when requested by eligible borrowers.
Recognizing the ongoing financial needs of low-income countries, we support extending the
DSSI in the context of a request for IMF financing. The modalities of the extension should
reflect the G20’s commitment to transparency and creditor coordination, including an
understanding on key features for debt treatment beyond the DSSI, as well as reflecting the
need for fair burden sharing among all creditors. To this end, we strongly urge full and
transparent participation by o icial bilateral creditors, including all state-owned lending
institutions, based on an enhanced term sheet and, ideally, a common Memorandum of
Understanding that clarifies DSSI implementation.
Going forward, we recognize that some countries will need further debt treatment in
addition to the DSSI’s liquidity relief to restore debt sustainability. In this context, we
support the development of a Common Framework for future debt treatments beyond the
DSSI, to be agreed by the G20 and Paris Club by the time of the October G20 Finance
Ministers and Central Bank Governors’ meeting. The Framework should set out provisions
for the scope of creditor participation and transparency, and call for coordinated debt relief
on a case-by-case basis in the context of a full-fledged IMF program. The Framework should
ensure fair burden sharing among all o icial bilateral creditors, and debt relief by private
creditors at least as favorable as that provided by o icial bilateral creditors. It should also
lay the foundation for sound and robust financing practices in the future, including on
transparency and governance. We strongly urge all o icial bilateral creditors to support and
adhere to such a G20-Paris Club Framework to set clear expectations for all. Additionally,
G20 and Paris Club creditors should jointly agree on specific terms for country-by-country
debt restructurings.
Addressing debt vulnerabilities also requires full transparency by both creditor and borrower
countries. We commend the World Bank Group’s e orts to compile and publicly disclose
creditor-by-creditor information. All creditors should provide complete information to
maximize the benefits of the DSSI. We call on the G20 to endorse the full and timely
publication of the World Bank and IMF updates on the implementation of the DSSI. We also
call on G20 members to endorse the World Bank and IMF’s debt data reconciliation and the
publication of the results. This exercise is crucial to inform any future debt treatments. More
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G7 Finance Ministers’ Statement on the Debt Service Suspension Initiative and Debt Relief for Vulnerable Countries | U…

broadly, we strongly support e orts of the IFIs to help their member countries strengthen
debt sustainability and transparency practices, including through technical assistance,
lending policies, and enhanced public reporting of debt data. We welcome ongoing work by
the Institute of International Finance to finalize rapidly a data host for their Voluntary
Principles on Debt Transparency.

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