The G20 Has Agreed On A Common Framework For Government Debt Restructuring

The G20 Has Agreed On A Common Framework For Government Debt Restructuring

The G20 has agreed on a common framework for government debt restructuring. The corona crisis is likely to make it more difficult for some of the poorer countries to repay their debts and to need relief from repaying them. G20 finance ministers said that in addition to the temporary debt freeze, which will be extended until 30 June 2021, further assistance is needed to some developing countries whose financial situation has been exacerbated by the new coronavirus pandemic. Large creditors, including China, are expected to adopt common rules agreed at G20 level that outline ways to write off and restructure debt deemed unsustainable. The framework agreed by the G20 is largely based on the rules of the Paris Club of Creditors, an informal association of predominantly wealthy creditors that was set up in 1956 and was supported by the Paris Club. The G20 finance ministers said in a joint statement that the aim of the new framework is to help indebted countries even after the agreed deferral of debt repayments has ended. G20 leaders are expected to approve the framework at a virtual summit next week.