G20 Common Framework for Debt Treatments
A procedure adopted in November 2020 by the G20 and the Paris Club to restructure the debt of low income countries case by case, bringing in official creditors outside the Club, China included.
The Paris Club brings together Western official creditors, but a growing share of poor countries' debt is owed to China, to other non-member bilateral lenders and to private creditors. The Common Framework was created to get them all to the same table. A debtor country applies, the IMF determines what the debt must become to be sustainable, an official creditor committee negotiates, and the country must then secure at least comparable treatment from private creditors. The process has been criticized for its slowness, each case having taken years. For export credit agencies, which are among the bilateral creditors, the date of the agreement determines when they recover.
Chad was the first country to request a treatment, in January 2021. In November 2022, its creditors, including the trader Glencore for the private debt, reached an agreement with no reduction in face value, since higher oil prices had improved the country's outlook. Zambia, Ethiopia and Ghana went through the same process.
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