G20’s Common Framework for debt treatment beyond the DSSI
The Common Framework for debt treatment beyond the DSSI (Common Framework) is an initiative of the G20, together with the Paris Club to support Low-Income Countries with unsustainable debt in a structural manner.
The Common Framework considers debt treatment, on a case-by-case basis, driven by requests from eligible debtor countries. In response to a request for debt treatment, a Creditor Committee is convened. Negotiations are supported by the IMF and the World Bank, including through their Debt Sustainability Analysis.
The idea is that the debt treatment under the Common Framework should be accompanied by reforms ensuring the future sustainability of public debt, and consistent with the parameters of an Upper Credit Tranche (UCT) IMF-supported program.
The Common Framework represents a step-change for official creditors, bringing together the Paris Club and G20 official bilateral creditors in a coordinated process. Such an approach will allow addressing solvency challenges with a long-term perspective, ensuring the participation of private-sector creditors and of other official creditors through the comparability of the treatment clause included in the multilateral agreement, which implies that they provide debt treatments on terms as least as favourable.
To date, three countries have requested a Common Framework treatment and in April 2021 there has been the launch of the first Creditor Committee for a debt treatment for Chad.
