Debts: Developing Countries

Treasury written question – answered at on 16 July 2020.

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Photo of Bambos Charalambous Bambos Charalambous Shadow Minister (Home Office)

To ask the Chancellor of the Exchequer, what discussions he has had with his international counterparts on the merits of extending the Debt Service Suspension Initiative to include middle-income countries.

Photo of Bambos Charalambous Bambos Charalambous Shadow Minister (Home Office)

To ask the Chancellor of the Exchequer, what estimate he has made of the amount of international debt held by private creditors under English law; and what assessment he has made of the ability of UK creditors to sue developing countries for defaulting on debt repayments in English courts.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

Under the Debt Service Suspension Initiative, the G20 committed to suspend the debt repayments of the world’s poorest 77 countries. The G20 focused on these countries as they are particularly vulnerable to the economic pressures of the pandemic; and because G20 creditors have a larger share of these countries’ outstanding debt, as middle-income countries borrow much more from commercial markets. Given the more complex composition of many middle-income countries’ debt, and their access to capital markets, the G20 did not agree a blanket approach to respond to middle-income country debt vulnerabilities would be appropriate.

In 2019 the IMF assessed that 45% of the total outstanding stock of international sovereign bonds by nominal principal amount are governed under English law.

The G20 have called for private creditor participation in the DSSI on a voluntary basis. It is important that developing countries do not see their access to international capital markets become too costly or restricted as mobilising private finance will be essential for crisis recovery and long-term sustainable development. HM Government will continue to monitor implementation of the DSSI by private lenders under this voluntary framework closely, as it is important that all creditors work together to help enable countries especially vulnerable to the pandemic to protect their citizens and economies.

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