G20 : Economic Cooperation ahead

What is the G20 Common Framework?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Paris Club, G20

Mains level : Not Much

Chad has become the first country to officially request a debt restructuring under a new common framework “G20 Common Framework” introduced by China and other Group of 20 countries last year with the help of the Paris Club.

What is G20 Common Framework?

  • G20 Common Framework is the Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI).
  • It was announced in November 2020 to deal with the issue of unsustainable debts faced by various countries as an impact of COVID-19.

What is the news?

  • This official request of Chad for debt restructuring under the G20 common framework was notified by the International Monetary Fund (IMF).
  • The creditors will now soon begin discussions on the first test of the new framework.
  • The creditors will also ask China and other private-sector creditors to participate as agreed last year.
  • A new four-year programme of Chad worth about $560 million under the Extended Credit and Extended Fund facilities was announced by IMF.
  • Chad is under high debt like many other African countries.

Significance of the move

  • This is the first time that a country has requested debt restructuring under the framework and the investors will now look at how the framework can work.
  • Participation in China is also a question. Last year, G20 Common Framework brought non-members of the Paris Club- India, China, and Turkey to join the framework.

Back2Basics: Paris Club

  • Paris Club is a club or group of officials from major creditor countries.
  • It was established in the year 1956.
  • It aims to find sustainable solutions to the difficulties faced by debtor countries in payments.

 

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