Today the G20 announced a six-month extension to the Debt Service Suspension Initiative. It also extended the period of debt payments suspension from four years to six years. In addition, the G20 announced a common framework for debt treatments beyond the DSSI, the details of which will be announced in November. 

In response to this announcement, Iolanda Fresnillo, Senior Policy and Advocacy Officer at the European Network on Debt and Development (Eurodad) said: 

"Today's announcements look positive on the surface, but in fact they continue the piecemeal approach that the G20 has adopted throughout this process. 

 "Firstly, there is still no debt cancellation for countries struggling with unsustainable debt. Secondly, the G20 has granted a very short extension, creating unnecessary uncertainty for participant countries and making it very unlikely any other countries still in desperate need will join at this point. Thirdly, the continuing lack of binding involvement by private and multilateral creditors reduces the benefits of the DSSI for a large number of countries. These factors demonstrate that it was a mistake not to offer a more ambitious proposal from the beginning, as requested by more than 200 CSOs, including Eurodad, in April 2020. 

 "The announcement of an agreement on a common framework for debt treatments beyond the DSSI is also not a satisfactory response. So far we don't know under which conditions these debt treatments will be offered, to which countries or from which lenders, or whether the agreement includes any kind of debt cancellation. 

"The G20 seems to be addressing a mounting debt crisis in developing countries with a policy framework from a bygone era.  Without a multilateral, fair and transparent framework for debt resolution, countries in debt distress are and will be caught between creditor disputes, which are already increasing the economic and social costs of debt crisis resolution, while the pandemic and its economic consequences remain to be addressed.

 "What we do need is a dedicated debt relief and cancellation process for all developing countries in the wake of the Covid-19 crisis. In addition, the creation of a permanent mechanism, under the United Nations, for the systematic, comprehensive and enforceable restructuring of sovereign debt, is crucial. 

 "Whatever happens, the G20 will likely be forced to revisit this current approach in the not too distant future." 

ENDS

Contact: Julia Ravenscroft, Communications Manager, Eurodad: jravenscroft [at] eurodad.org / +32 486 356 814.

Note to editors: For more information read this report: The G20 Debt Service Suspension Initiative: Draining out the Titanic with a bucket?