Debt Service Suspension Initiative (DSSI) was adopted in May 2020.
To tackle the COVID-19
health
Health has a variety of definitions, which have been used for different purposes over time. In general, it refers to physical and emotional well-being, especially that associated with normal functioning of the human body, absent of disease, p ...
and
economic
An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...
crisis, development banks suspended debt service payments from the poorest countries that asked this suspension.
Thus 73 low- and lower-middle-income countries could devote to COVID-19 expenses the money they should have paid for their debts with these banks: US$4.6 billion.
[ DSSI was further complemented by additional financing provided by the ]World Bank
The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
, the International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
and other development banks.[
DSSI expired at the end of December 2021.][
]
Beneficiary countries
The countries which suspended their debt service under DSSI were Afghanistan, Angola, Burkina Faso, Burundi
Cabo Verde, Cameroon, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Republic of Congo, Côte d'Ivoire, Djibouti, Dominica, Ethiopia, Fiji, The Gambia, Grenada, Guinea, Guinea-Bissau, Kenya
Kyrgyz Republic, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Myanmar
Nepal, Niger, Pakistan, Papua New Guinea, Samoa, São Tomé and Príncipe, Senegal, Sierra Leone, St. Lucia,
St. Vincent and the Grenadines, Tajikistan, Tanzania, Togo, Tonga, Uganda, Yemen and Zambia.[
]
Requirements
Each beneficiary country will be required:
* to use the created fiscal space to increase social, health or economic spending in
response to the crisis;
* to disclose all public sector financial commitments, respecting commercially
sensitive information; and
* to contract no new non-concessional debt during the suspension period.
Common Framework
After DSSI (a provisional scheme) expired, the G20
The G20 or Group of 20 is an intergovernmental forum comprising 19 sovereign countries, the European Union (EU), and the African Union (AU). It works to address major issues related to the global economy, such as international financial stabil ...
established a permanent mechanism to help low-income countries dealing with huge debt: the Common Framework.[
]
See also
* Debt relief
* Debt service ratio In economics and government finance, a country’s debt service ratio is the ratio of its debt service payments (principal + interest) to its export earnings.Glossary of Statistical TermsDebt service ratio OECD, Sep 25, 2001. A country's internation ...
* Debt service coverage ratio
The debt service coverage ratio (DSCR), also known as the debt coverage ratio (DCR), is a financial ratio that measures an entity's ability to generate sufficient cash to cover its debt obligations, including interest, principal, and lease paymen ...
* Developing countries' debt
The debt of developing countries usually refers to the external debt incurred by governments of developing countries.
There have been several historical episodes of governments of developing countries borrowing in quantities beyond their abi ...
* External debt
A country's gross external debt (or foreign debt) is the liabilities that are owed to nonresidents by residents. The debtors can be government, governments, corporation, corporations or citizens. External debt may be denominated in domestic or f ...
* Government debt
A country's gross government debt (also called public debt or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit occu ...
(public debt)
* Heavily indebted poor countries (HIPC)
* Millennium Development Goals
In the United Nations, the Millennium Development Goals (MDGs) were eight international development goals for the year 2015 created following the Millennium Summit, following the adoption of the United Nations Millennium Declaration. These w ...
* Multilateral Debt Relief Initiative (MDRI)
* Odious debt
In international law, odious debt, also known as illegitimate debt, is a legal theory that says that the national debt incurred by a despotic regime should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts ...
References
{{Global economic classifications
Economic development programs
Third World debt cancellation activism
Economic country classifications