- Chad, Ethiopia and Zambia considering debt restructuring: 53% of their debt payments are to private lenders
- Legislation to be introduced in New York to make restructuring private debt easier
In the last week, three countries have indicated they want to use the G20’s new framework for restructuring their debt – Chad, Ethiopia and Zambia. Many more could follow.
The G20 framework enables debts owed by eligible countries to other governments to be reduced, and says that private lenders should be included as well. However, it is unclear how private lenders will be made to take part in debt reduction.
Now Chad, Ethiopia and Zambia are applying for the G20 framework, their forthcoming debt payments emphasise just how important private lenders are in countries with the highest debts. Of the three countries’ external debt payments over the next four years, 53% are to private lenders, 24% to the Chinese government, 16% to multilateral institutions such as the World Bank and 7% to other governments.
Jubilee Debt Campaign has proposed that the UK and New York should pass legislation to make restructuring debts to private lenders easier. Almost all international debts are governed by English or New York law, with 90% of bonds owed by countries eligible for the G20 initiative owed under English law.
On Monday, New York lawmakers announced plans to introduce legislation to enable a super-majority of creditors to agree a debt restructuring, which would then be binding on all creditors. We urgently need the UK Government to follow suit and bring forward legislation to facilitate the restructuring of debts owed by countries under UK law.