The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

A cautionary tale of debt relief

Debt relief will free up essential funds but could be more punitive than helpful.

book-light_780



Many governments in the emerging world are facing a difficult conundrum: how to balance the near-term health risks of Covid-19 against the long-term impact of lost livelihoods.

Underdeveloped healthcare systems and fragile economies mean that many of these countries do not have the fiscal firepower to fight the disease or the economic downturn.

A suspension of debt payments will free up vital funds to fight the crisis and this looks increasingly likely after private and official creditors agreed to collaborate on a debt standstill beginning May 1. The Debt Service Suspension Initiative (DSSI) will apply to 77 countries, which have outstanding debt payments amounting to $140 billion.

But the process is complex and unless solutions are developed to guarantee debt sustainability and continued access to capital markets in the future, it could do more harm than good.



It requires significant collaboration between all stakeholders... to ensure that countries are not stigmatized for coming forward for relief


It requires collaboration between all stakeholders – the Paris Club, G20, China, multilateral development banks, private creditors, ratings agencies and governments – to ensure that countries are not stigmatized for coming forward for relief.








You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree