Data management and reporting to enhance transparency in private sector lending to low-income countries

29/03/2021 - The COVID-19 pandemic has prompted a renewed focus on data transparency to better assess and address debt sustainability, particularly for the world’s poorest and most vulnerable countries. In addition to the direct impact of the pandemic on the healthcare systems, declining revenues present an ongoing threat to growth in these countries, and to their ability to service their debt. The G20 Debt Service Suspension Initiative (DSSI), which calls on both official and private creditors to offer forbearance to eligible countries that request it, has also underscored the key role of transparency in sovereign debt markets.

An adequate improvement to the transparency related to existing debt transactions, terms and conditions could help avoid macroeconomic stability risks. In this context, the IIF Voluntary Principles for Debt Transparency are designed to enhance transparency in private sector lending, particularly to vulnerable low-income countries.

Promotion of transparency of debt data has become an important issue in the international community, fostered by several initiatives such as the ‘OECD sustainable lending principles for official export credits’ and the ‘G20 operational guidelines for sustainable financing’ which are widely supported by G20 members. Moreover, the G20 has supported the implementation of the Voluntary Principles during the past two G20 presidencies. The Principles have taken on additional meaning since the DSSI, and its full operationalisation could help make the international coordination and negotiations of debt servicing and suspension, or similar negotiations under the G20 Common Framework, fairer and more durable to improve borrowers’ debt sustainability. […]