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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. […]