A “debt standstill” for the poorest countries: How much is at stake?

Developing countries are already suffering from the health, social and economic consequences of the coronavirus. A looming debt crisis would be catastrophic. On 15 April, G20 finance ministers agreed to a debt “standstill” for 2020. This policy paper aims to illustrate the impact of this decision on donors and developing countries, including an assessment of the countries that will bear the burden of immediate debt service suspension. While successful at alleviating immediate liquidity pressures, this policy should be followed by country-by-country analyses of sustainability. A “debt standstill” for the poorest countries: How much is at stake?

With  the  spread  of  COVID-19,  the  world  is  facing  an  unprecedented  challenge:  two  concomitant crises –the first threatening the health and lives of their populations; the second sharply reducing economic  activity and threatening livelihoods. While  the  pandemic  has mainly spread  in developed countries in a  first  instance, confinement  measures  have been  stringent  everywhere and the  economic shocks are already fully   global.  

However,   while   developed   nations   are   using   the   full-range   of macroeconomic  tools  to  mitigate  impact,  developing  countries  have  little  monetary  or  fiscal  space  to cushion  the  blow. […]