As the G20’s COVID-related Debt Service Suspension Initiative nears its end 60% of low-income countries are currently at high risk or already in debt distress compared to almost 30% in 2015.
“We may see economic collapse in some countries unless G20 creditors agree to accelerate debt restructurings and suspend debt service while the restructurings are being negotiated,” note the report’s authors.
Indebted countries will have to resume servicing their debts to G20 creditors in January 2022.
The largest creditor country currently is China which saw its lending go from less than $10 billion in 2006 to more than $110 billion in 2020, accounting for more than half of $200 billion low-income country debt and almost all growth in low-income country debt since 2006.
The authors of the report call for the improvement of the common framework intended deal with insolvency and protracted liquidity problems of debtors, which coordinates G20 official creditors.
By Feike de Jong