Debt service suspension for poorest countries

News - 16 APR 2020

On March 24, the World Bank Group and the IMF called upon Official Bilateral Creditors to suspend debt payments for the poorest countries of the world.

The governments of the Export Credit Agencies, members of the Paris Club, will take part in this initiative and suspend payments during the period May 1 – December 31, 2020.

Only maturities under already agreed Paris Club Agreements

The initiative will only affect maturities due under already agreed Paris Club Agreements, so called PRD (Previously Rescheduled Debt) and will not affect new contracts that are currently being honored under ongoing and recently finished projects.

At this stage only Official Bilateral Creditors are affected. Private creditors will be called upon to participate on a voluntary basis.

Terms for the debt service suspension initiative for the poorest countries:

  • Scope of beneficiary countries are all IDA countries and all least developed countries as defined by the United Nations, that are current on any debt service to the IMF and the World Bank.
  • The duration of the suspension of payment is until the end of 2020 with an opening for creditors to consider a possible extension, taking into account a report on the liquidity needs of eligible countries by the World Bank and IMF.
  • The suspension period will start on May 1, 2020.
  • Both principal repayments and interest payments will be suspended.
  • A cut-off date protecting new financing in case of possible future restructuring will be set on March 24, 2020.
  • The repayment period will be 3 years, with a one-year grace period (4 years total).

For further information, please contact

Ann Skoglund, tel: +46 (0)8 788 00 57, ann.skoglund@ekn.se

Facts

IDA countries

IDA is the part of the World Bank that helps the world’s poorest countries.

Cut-off date

A date set to ensure that only credits/contracts etc. granted before this date will be affected by a debt rescheduling, payment suspension or other debt initiative.

Paris Club

The Paris Club is the forum where public and officially guaranteed export credits are renegotiated when a country has encountered such great payment problems that the country can no longer honour its commitments.