Reacting to the Institute of International Finance proposal on a voluntary debt payment suspension to private lenders launched today, Tim Jones, Head of Policy at Jubilee Debt Campaign said:
“Any country wanting to suspend debt payments under this proposal will need to negotiate directly with individual lenders, including on the interest rate that will be charged on deferred payments. A country desperately needing to stop debt payments now could end up paying far more in the medium term due to accrued interest. Furthermore, even if a country can reach agreement with some private lenders for a suspension, other lenders will be free to ignore it.
“Overall, the G20 agreement in April and IIF proposal today go nowhere near responding to the unprecedented nature of the coronavirus debt crisis.
“The UK and New York need to urgently act to pass legislation to prevent borrowing countries from being sued if they suspend debt payments as suggested by the G20. We need to see the comprehensive cancellation of debt payments across all creditors to avoid a major debt crisis in two years’ time, and an agreement on a multilateral debt workout mechanism to reduce debt to a sustainable level in the medium term.”