The G20 finance ministers have adopted a new framework that will make it possible to reduce, or even eliminate, some of the debt of the poorest countries in the world. One week before the next G20 summit, finance ministers have decided to go beyond the current moratorium on the debts of poor countries, a moratorium extended to June 2021, but not enough, while some countries in the south are already suffocated by debt.
It is a small revolution but is still described as historic by the Japanese Minister of Finance. For the first time, all public creditors in poor countries have agreed on new common rules.
So far, China, the third bank’s chief bank directive, but also Saudi Arabia and Turkey, have refused the rules for Paris Club. This made it impossible to consider a reduction or even a cancellation the debts of the poor countries.
From now on, everyone agrees to participate in a new common framework. This means that a indebted country that wants to ease its burden will be tomorrow in front of all its creditors who must participate in the effort, under the leadership of the IMF.
In addition, another major advance: a indebted country can demand from its private creditors the same treatment as it was granted by its public creditors. This new framework will be officially presented at the G20 summit in a week’s and it will undoubtedly save some over-indebted states from bankruptcy. For example, Zambia can no longer pay the maturities of its Eurobonds, ie its debt decreased in the financial markets.
►To read: Zambia: payment suspension threatens the country