The country’s external debt stock reached $30.4 billion in 2020, according to New Atlanticist.
The G20 launched the Debt Services Suspension Initiative (DSSI) at its April 2020 virtual meeting, calling on official and private-sector creditors to temporarily suspend the interest and principal that eligible LICs owed them. The initiative, originally meant to last through the end of 2020, was extended to the end of 2021. The money due to creditors will be repaid in the following five years, with a one-year grace period.
In all, forty-eight countries applied for DSSI relief, receiving thirteen billion dollars of debt-service suspension. The relief was granted mainly by bilateral, official lenders led by the Paris Club—a group of twenty-two creditor nations—and China. In total, Beijing has negotiated $10.8 billion worth of relief with debtor countries over the past two years, mostly through reprofiling and rescheduling outstanding debt.
Chad, Ethiopia, and Zambia are the only countries to have applied for another of the G20’s initiatives to help heavily indebted nations: the Common Framework (CF) for debt treatments.
The combined external debt stock of the 10 largest DSSI-eligible borrowers (Angola, Bangladesh, Ethiopia, Ghana, Kenya, Mongolia, Nigeria, Pakistan, Uzbekistan, and Zambia) was $509 billion at end-2020, 12 percent higher than the comparable figure at end-2019 and equivalent to 59 percent of the external debt obligations of all DSSI-eligible countries combined. They also accounted for 65 percent of the end-2020 private non-guaranteed external debt of DSSI-eligible countries.
With the termination of the DSSI at the end of 2021, these LICs face debt-service payments worth $11 billion more this year. Overall, the external debt-service obligations of LICs have increased to 14.3 percent of government revenues in 2020 from only 6.8 pe
rcent in 2010—threatening to crowd out urgently needed public spending on health, social services, and other development needs. The G20 should create new measures to alleviate the unsustainable and harmful debt-service burden on LICs.
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