The World Bank is supporting the extension of the Debt Service Suspension Initiative (DSSI) by six months.
It will also examine, by the time of the 2021 WBG and International Monetary Fund Spring Meetings, if the economic and financial situation of developing and emerging economies requires to extend further the DSSI by another six months, with targeted complements to the April 2020 DSSI Term Sheet.
This will cushion many developing countries including Ghana from shocks brought by covid-19 that has slowed down the fiscal consolidation process.
Prior to that, the Finance Minister, Ken Ofori-Atta who Chaired the Development Committee of the Annual IMF/World Bank meeting had pushed for an extension of the repayment of debts by African countries because of their economic state.
In a communique, the World Bank said all official bilateral creditors should implement this initiative fully and in a transparent manner.
“We strongly encourage private creditors to participate on comparable terms when requested by eligible countries. Thanks to the efforts of official bilateral creditors, the DSSI is creating much needed fiscal space and supporting the financing programs of the WBG and IMF for the poorest countries.”
It emphasized that “while protecting their current ratings and low cost of funding, we encourage MDBs to go further in their collective efforts in supporting the DSSI, including through providing net positive flows to DSSI-eligible countries during the suspension period, including the extension period.”
“We encourage the WBG to explore additional proposals for COVID-19 emergency financing for IDA countries in its discussions with IDA deputies. We ask the WBG and IMF to continue supporting DSSI implementation, including by providing further details on the net new resources they are providing to each eligible country. We ask the WBG and the IMF to continue their work to strengthen quality and consistency of debt data and improve debt disclosure”, it added.
Amid high public debt levels, shrinking economies, and rising fiscal pressures, the World Bank recognized that debt treatments beyond the DSSI may be required on a case-by-case basis.
In this context, it welcomed the G20’s agreement in principle on a “Common Framework for Debt Treatments beyond the DSSI”, which is also agreed by the Paris Club, adding, it look forward to the endorsement of the Common Framework by members, subject to their domestic approval procedures.
The Bretton Wood institution commended Mr Ofori-Atta, for his guidance and leadership as Chair of the Committee during the past two years, and Yvonne Tsikata for her invaluable service to the Development Committee over the past four years.
It welcomed Mia Amor Mottley, Prime Minister and Minister of Finance of Barbados, and Azucena Arbeleche, Minister of Economy and Finance of Uruguay, who have been selected as sequential Chairs for the periods of November 2020 to October 2021, and November 2021 to October 2022, respectively.