Debts: Developing Countries

Treasury written question – answered on 11th January 2021.

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Photo of Preet Kaur Gill Preet Kaur Gill Shadow Secretary of State for International Development

To ask the Chancellor of the Exchequer, what recent steps he has taken to provide the tools necessary for low income countries to reduce debt from private lenders.

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

G20 Finance Ministers have agreed to a “Common Framework for Future Debt Treatments beyond the DSSI”, which provides a process for coordinated debt treatments by the Paris Club and G20 creditors. Under the Common Framework, private sector creditors will be required to implement debt restructurings that are at least equivalent to those agreed by official creditors. This agreement should pave the way for more equitable and effective case-by-case debt restructurings, which are likely to be required as part of the recovery from the Covid crisis. The Common Framework applies to any country that is International Development Association (IDA) - eligible or on the UN’s list of Least Developed Countries.

The UK is providing £1m over two years to the African Legal Support Facility, which provides expert legal and financial advice to African countries, specialising in creditor litigation.

The UK is also providing £4m over 5 years to fund the Debt Management Facility, a joint IMF-World Bank trust fund focused on building debt management capacity in low income countries.

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