External publications

Covid-19 Crisis: how should the G20 support heavily indebted low-income countries?

Berensmann, Kathrin / Abebe Shimeles / Njuguna Ndung'u
External Publications (2020)

in: T20 Saudi Arabia, Task Force 8 (International Financial Architecture), Policy Brief

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As low-income countries (LICs) need assistance to manage the effects of the COVID-19 crisis, the G20 can play an important role in providing short-term liquidity with a suspension of debt service payments and debt relief. However, debt relief should be bound to reforms, and LICs bear part of the responsibility for coping with the crisis. To prevent a debt crisis in the long term, the G20 could implement measures to promote responsible lending and borrowing among LICs. Two instruments are particularly important: (i) guidelines for responsible lending and borrowing, and (ii) effective debt management.