The G20 is Going to Try One More Time to Get Everyone Together to Come Up With a Debt Relief Plan for Poor Countries

Finance Ministers and central bankers from the Group of 20 will convene an extraordinary meeting on November 13th in a bid to come up with a more robust debt relief plan for the world’s poorest countries.

A couple of weeks ago when this same group got together, they weren’t able to come up with much beyond a lowest-common-denominator agreement that extended the G20’s Debt Service Suspension Initiative (DSSI) by 6 months.

They also agreed at that last meeting to a common framework to restructure bilateral debt, an issue that China initially opposed. Now, at this upcoming conference, analysts will be checking if the ministers apply that common framework to enact more sweeping debt relief initiatives for several countries at once, rather than on a one-by-one basis as they’ve done to date.

Regardless, China will remain an obstacle. While Beijing insists that it’s committed to working with the DSSI framework, it has doing so bilaterally with borrowing countries rather than coordinating with other G20 members and the Paris Club of lenders. 

“Beijing is likely to oppose the common framework and will instead seek to maintain its flexibility in negotiations with debtor countries,” Gabriel Wildau, a senior vice-president at consulting firm Teneo, said in a research note. “China does not oppose debt relief per se but wants to avoid constraints on its negotiating leverage.”

Interestingly, this G20 event will take place on the same day that a group of private creditors will also meet to vote and decide whether to grant Zambia the six-month repayment holiday on $3 billion of Eurobond notes that the government requested. And, just as with the DSSI, one of the sticking points for these investors is China’s role in the process. In particular, they’re concerned about the lack of transparency in the ongoing talks between Chinese policy banks and the finance ministry in Lusaka.

Yesterday, the China Development Bank announced that it would defer repayment of a single Zambian loan for six months, it’s not clear which one, and last week China’s top diplomat for Sub-Saharan Africa, Wu Peng, acceded to one of the private creditors’ central demands by committing to equal treatment for all investors.

SUGGESTED READING:

• Bloomberg: G-20 Plans Extraordinary Meeting to Discuss Debt Relief by Alonso Soto, Eric Martin, and Ilya Arkhipov
• Reuters: Zambia wins deferral on China Development Bank loan repayments by Chris Mfula

• Get a daily email packed with the latest China-Africa news and analysis.
• Read exclusive insights on the key trends shaping China-Africa relations.
• Connect with leading professionals on the China- Africa Experts Network.

You've reached your free monthly article limit.

Subscribe today for unlimited access.

-17% Savings

The post The G20 is Going to Try One More Time to Get Everyone Together to Come Up With a Debt Relief Plan for Poor Countries appeared first on The China Africa Project.

source https://chinaafricaproject.com/2020/10/29/the-g20-is-going-to-try-one-more-time-to-get-everyone-together-to-come-up-with-a-debt-relief-plan-for-poor-countries/?utm_source=rss&utm_medium=rss&utm_campaign=the-g20-is-going-to-try-one-more-time-to-get-everyone-together-to-come-up-with-a-debt-relief-plan-for-poor-countries