Reaction to G20 Common Framework for debt treatments

Today the G20 announced a ‘Common Framework for debt treatments’. Campaigners had hoped it would provide a mechanism for permanent solutions to debt crises, which it has failed to do.

The framework allows for rescheduling of debts to other governments. It allows for, but discourages, debt cancellation. The G20 agreement says debtors should “seek” the inclusion of private lenders in debt reschedulings but does not create any mechanism to enable this to be done and does not say what should happen if private lenders refuse. The G20 communique also allows multilateral lenders like the World Bank to keep refusing to participate in debt relief.

Reacting to the announcement Tim Jones, Head of Policy at Jubilee Debt Campaign, said:

“This announcement falls far short of what is needed to tackle the wave of debt crises in poorer countries. With many countries facing debt crises and Zambia today on the verge of default, the G20 need to stop kicking the can down the road and build a transparent and inclusive system for cancelling debts to a sustainable level across private, bilateral and multilateral lenders.

“The G20 say private lenders should be included in debt restructurings, but do not offer debtor countries the tools to do that. Almost all international debt contracts are owed under English or New York law. The UK and US need to pass legislation to enable debts to private lenders to be restructured.”

 

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