IIF Authors

Status: Will be live at 11/12/2020 16:00

IIF Letter to the G20 on DSSI Extension and Common Framework

In the wake of the extension of the G20 Debt Service Suspension Initiative (DSSI), as well as recent thoughtful proposals for reforming the international sovereign debt architecture, the IIF offers these private sector perspectives that build on our September 22 letter to the G20.

Key points:

  • While there have been very few requests from DSSI-eligible countries for forbearance to date from the private sector that we are aware of, consent solicitations have been sent to and approved by bondholders for three non-DSSI countries during the COVID crisis.
  • Private creditors remain ready to take part in the extended DSSI upon request from eligible countries.
  • It is clear that the pandemic has increased the risk of debt distress; in such cases private creditors stand ready to engage in good faith on debt treatments that restore long-term debt sustainability, in the context of an IMF-supported policy program, with comparability of treatment for all creditors.
  • Given the significant implications of comparability of treatment for private sector creditors, we strongly urge that development and application of the Common Framework be a consultative process including the private sector.
  • Towards this end, the IIF would be pleased to help convene a public-private sector group of experts and provide a forum for regular consultation—in the context of the Common Framework and more broadly as incremental reforms to the sovereign debt architecture are considered.

These perspectives are informed by discussions with the IIF Committee for Sovereign Risk Management (CSRM), and by the October meeting of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring.