Surge in Sovereign Debt Restructurings

On account of such unprecedented global conditions, IFIs and MDBs, together with the G-20 (Paris Club and non-Paris Club countries), sought to develop options for sovereign countries facing debt sustainability issues

» Debt Service Suspension Initiative (DSSI) was introduced for the poorest countries in April 2020

• 73 countries were eligible but only 40 participated rescheduling US$10.3 billion in payments

» More was needed to assist governments address financing shortfalls and rapid accumulation in public sector debt positions – the Common Framework (CF) for debt treatment was in introduced in November 2020

» Only four countries have requested treatment under the CF – but one (Chad) has managed to secure necessary debt relief

» Delays in securing debt relief have been a consequences of:

• Protracted formation of official (bilateral) creditors committee (OCC) and oordinating action among all creditors -- official and private sector

• Understanding creditor requirements and constraints

• Lack of sovereign debtor capacity assessing debt sustainability