It is expected that the G20 will agree on Friday on a common framework that allows the debt restructuring of poor countries and equates public creditors, including China, and the private, according to a source from the French Finance Ministry, Thursday.
After freezing debt service payments in April for a period of six months, and then extending the decision in October until June 2021, the G20 decided to proceed with considering requests for "rescheduling and curtailing" or even "debt cancellation" after studying them. Each case is alone. "
A source from the French Finance Ministry said, "The framework that will be adopted Friday by the G20 finance ministers defines common principles for the 22 member states of the Paris Club, as well as five other countries in the G20: China, India, Saudi Arabia, South Africa and Turkey."
73 countries will be eligible for debt restructuring, 38 of which are from sub-Saharan Africa.
The source added, "This is a historic agreement because it is the first time that countries agree on a common framework outside the Paris Club, whose membership is not occupied by China, and the latter represents by a large margin the first creditor in the world."
This agreement is supposed to avoid unilateral, often unfair restructuring processes. In the past, for example, "the Paris Club approved cuts, while China or Saudi Arabia continued to collect debts or mortgage assets, similar to the ports, in exchange for debt treatment."
The agreement also provides for the participation of private creditors who did not participate in freezing the payment of debt service, in accordance with the principle of "equal treatment", which means that a debtor who agrees to a general creditor to restructure his debt will be able to request the same treatment from all his creditors.
The International Monetary Fund will be the "pillar" of this system, because the countries that will seek to benefit from the restructuring must implement an economic program set by the Fund to ensure their ability to pay their debts.
