Paris Club Debt Relief at $1.1 Billion After Four More Waivers
Governments are losing their fear of asking for debt-repayment suspension this year after 12 nations were granted waivers totaling $1.1 billion in recent weeks, according to the chairwoman of the Paris Club.
The group of 22 mostly wealthy country creditors announced waivers for Pakistan and Ethiopia, the two biggest economies to get relief so far, as well as Chad and the Republic of Congo late on Tuesday.
“Debtor countries saw that others were using it, so that reduced the fear and stigma,” Chairwoman Odile Renaud-Basso told reporters in a telephone briefing on Wednesday. “We see today an acceleration in the number of demands.”
Many of the 73 countries eligible for the relief plan have been reluctant to participate due to fears of credit-rating downgrades amid concerns the freeze could include private creditors. Thirty one countries, including 22 in sub-Saharan Africa, have applied for the suspension under the agreement by the Group of 20 leading economies to help the world’s poorest nations with the coronavirus pandemic.
The club has held talks with ratings companies to avoid any action against countries participating in the initiative, Renaud-Basso said. China is implementing waivers individually with each country, but questions remain on which obligations can be delayed, she said.
“Paris Club been quickest and set a good example to other creditors. But speed due to it being only a small creditor,” Gregory Smith, a strategist with London-based M&G Investments, said on Twitter. “Unless China steps up, plus in some cases multilateral and private creditors, relief is too small.”
The initiative was meant to freeze around $11 billion in bilateral debt payments this year. Debt service to private creditors and multilateral lenders amounts to about $20 billion, according to the Institute of International Finance.
Pakistan owed $10.8 billion to Paris Club members by late 2018, while Chad, Congo Brazzaville and Ethiopia have combined obligations of $1.31 billion, according latest data by the club.
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