G20 agrees on new framework for future debt restructurings

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G20 finance ministers agreed for the first time on Friday a new joint framework for restructuring government debt in anticipation that the coronavirus crisis will leave some poor countries in need of deep debt relief.

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Major creditors, including China, will be expected to follow the common guidelines laying out how debt deemed unsustainable can be reduced or rescheduled.

Under the framework, creditor countries will negotiate together with a debtor country, which will be expected to seek the same treatment terms from private sector creditors.

G20 finance ministers said in a joint statement that the framework aims “to facilitate timely and orderly debt treatment” for countries eligible for a debt payment freeze put in place in April, but which only included private sector creditors on a voluntary basis.

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