The health crisis has dealt a major blow to the world’s poorest countries, causing a recession that could push more than 100 million people into extreme poverty.
That is why the World Bank and the International Monetary Fund urged G20 countries to establish the Debt Service Suspension Initiative. The DSSI is helping countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people. Since it took effect on May 1, 2020, the initiative has delivered more than $5 billion in relief to more than 40 eligible countries.
In all, 73 countries are eligible for a temporary suspension of debt-service payments owed to their official bilateral creditors. The G20 has also called on private creditors to participate in the initiative on comparable terms. The suspension period, originally set to end on December 31, 2020, has been extended through December 2021.
The World Bank and the IMF are supporting implementation of the DSSI—by monitoring spending, enhancing public debt transparency, and ensuring prudent borrowing. DSSI borrowers commit to use freed-up resources to increase social, health, or economic spending in response to the crisis. They commit to disclose all public sector financial commitments (involving debt and debt-like instruments). They also commit to limit their non-concessional borrowing to levels agreed under IMF programs and the World Bank’s non-concessional borrowing policies.