Q. With reference to the “G20 Common Framework”, consider the following statements:
1. It is an initiative endorsed by the G20 together with the Paris Club.
2. It is an initiative to support Low Income Countries with unsustainable debt.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Correct Answer: c) Both 1 and 2
Question from UPSC Prelims 2022 GS Paper
Explanation :
G20 Common Framework Initiative
The G20 Common Framework is an initiative that has been endorsed by the G20 together with the Paris Club. The Paris Club is a group of officials from major creditor countries whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries. The G20 is an international forum for governments and central bank governors from 19 countries and the European Union.
Addressing Debt Challenges in Low-Income Countries
The G20 Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI) is designed to address the challenges faced by Low-Income Countries (LICs) with unsustainable debt. The framework aims to provide a structured approach to debt treatment for these countries, ensuring that all creditors (both public and private) work together to address the debt vulnerabilities so that the affected countries can work towards achieving economic stability and sustainable growth.
The Common Framework was established in response to the financial strains caused by the COVID-19 pandemic, which exacerbated the debt vulnerabilities of many developing countries. It seeks to provide a coordinated approach to debt restructuring, tailored to the needs of each eligible country, while ensuring fair burden-sharing among creditors and maintaining the debtor country’s access to financing.
