Club de Paris and G20 Action on Debt Treatment at the Time of Covid-19

The liquidity crisis related to the Covid-19 pandemic could turn into a solvency crisis, requiring some countries to restructure their public debt. We indicate here that the change in the public debt landscape in low-income countries characterized by, on the one hand, the emergence of new (official non-Club de Paris or private) creditors and, on the other hand, the diversification of financing instruments, has strengthened the need for coordination. Then we recall the role of the Club de Paris as the principal international forum for restructuring official bilateral debt and its main principles. Finally, we present the joint action of the G20 and the Club de Paris. First, in response to the liquidity crisis, the debt suspension initiative (DSSI) represents an example of an effective coordination between Club de Paris creditors and other G20 creditors. Second, the Common Framework adopted on November 13, 2020, inspired by Club de Paris principles, should allow for coordination among the main official bilateral creditors for future restructuring when debt is unsustainable.