The world’s 20 largest industrialised nations agreed on a new joint framework for restructuring government debt to help poorer countries further bolster their finances in the wake of the coronavirus pandemic. The development came following an extraordinary meeting of finance ministers and central bank governors from the G20 countries. The framework, which is also agreed by the Paris Club group of mostly wealthy nations, will “facilitate timely and orderly debt treatment” for countries eligible for debt suspension from private sector creditors as well, the G20 said in a statement. The group of 20 major economies, which is currently headed by Saudi Arabia under a rotating presidency, agreed to a time-bound suspension of debt repayments in April to help poor nations strengthen their healthcare infrastructure and deal with the economic fallout from the pandemic. More than 46 countries have benefitted from this initiative, the G20 said last month. “Given the scale of the Covid-19 crisis, the significant debt vulnerabilities and deteriorating outlook in many low-income countries, we recognise that debt treatments beyond the Debt Service Suspension Initiative (DSSI) may be required on a case-by-case basis. In this context, we endorse the “Common Framework for Debt Treatments beyond the DSSI”, which is also endorsed by the Paris Club,” it said. The International Monetary Fund’s director general Kristalina Georgieva hailed the step as “a historic achievement”. “The DSSI has provided much needed “breathing space” to countries. For some of those that are facing temporary difficulties to service their debt, this breathing space is enough,” Ms Georgieva said during the virtual meeting. The debt suspension process will be initiated at the request of a debtor country. The need for debt treatment will be assessed based on an IMF-World Bank Group Debt Sustainability Analysis (DSA) and the participating official creditors’ collective assessment and will be consistent with the parameters of an upper credit tranche (UCT) IMF-supported programme. “The debtor country requesting a debt treatment will provide to the IMF, the WBG as well as creditors participating in the debt treatment, the necessary information regarding all public sector financial commitments (debt), while respecting commercially sensitive information.” All G20 and Paris Club creditors with claims on the debtor country, as well as any other willing official bilateral creditor with claims on the country, will coordinate their engagement with the debtor country and finalise jointly the key parameters of the debt treatment. The joint creditors negotiation shall be held in an open and transparent manner, the statement said. Debt eligible for the treatment will include all public and publicly guaranteed debts that have an original maturity of more than one year, according to the G20. “This (debt) suspension time ought to be used to bring them to a sustainable level. This is where the timely common framework comes into play – a coordinated approach to debt treatment, a standardised approach, but with case-by-case resolution,” Ms Georgieva said. “It is also so critically important, as many have said, to bring the private sector on board. Having the common framework would make this more likely, and applying it on a case-by-case basis will increase the viability of our action.” She, however, said “there is more work to be done” and renewed calls for further support and fresh financing. “There are other countries outside the DSSI that could face unsustainable debts. So how we use the common framework to further improve the international debt architecture is essential.”