Thank you to those who have contacted me about debt cancellation for developing countries in light of the pandemic.
I share concerns about the debt vulnerabilities in developing countries, which have been amplified by Covid-19. This is why I am glad that the UK, alongside G20 and the Paris Club of official creditors, has committed to a historic suspension of debt repayment from the world's poorest countries through the debt service suspension initiative (DSSI).
Since it took effect in May 2020, more than 40 countries have benefitted from over $10 billion in relief. This allows beneficiary countries to increase social, health or economic expenditure, and in doing so, better mitigate the impacts of the pandemic. This spending is monitored by the IMF and World Bank to ensure that it is done in accordance with the spirit of DSSI.
G20 Finance Ministers have also agreed a “Common Framework for Future Debt Treatments beyond the DSSI”, which brings together traditional, Paris Club, creditors and emerging G20 creditors such as China to deliver coordinated debt treatments on a case-by-case basis for the first time. 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-19 crisis.
Some constituents have made specific reference to Zambia. Zambia is one of three countries, along with Chad and Ethiopia, to have so far requested the Common Framework. Zambia reached a Staff-Level Agreement with the IMF in December 2021. At the IMF Spring Meetings it was indicated that China had agreed to join the creditor committee for Zambia. As a creditor to Zambia, it is a priority to work with the rest of the G20 to ensure swift progress on the debt treatment.
Thank you again for taking the time to contact me.