Private sector readying for case-by-case COVID-19 debt relief for poor countries: IIF letter to G20

LONDON (Reuters) - Private sector creditors have made a fresh pledge to support the world’s poorest countries address debt problems caused by the global COVID-19 crisis though said a blanket approach would endanger access to capital markets.

In a letter sent by the Institute of International Finance to the G20 group of major government ahead of meetings next week, the group said case-by-case debt restructurings were unavoidable rather than a one-size-fits-all approach.

“The issues in some countries are no longer temporary liquidity problems, but rather more fundamental solvency concerns,” the IIF’s letter, seen by Reuters, said.

It comes ahead of what is expected to be an extension of this year’s G20’s Debt Service Suspension Initiative (DSSI) for which over 70 of the world’s poorest countries are eligible.

The IIF’s letter added: “We note that this (extension) could result in a higher risk premium for market access countries.”

“We would also highlight the significant diversity of both borrowers and creditors, which makes debt service suspension a very complex undertaking with no evident ‘silver bullet’.”

Reporting by Marc Jones, editing by Karin Strohecker