PARIS, May 19 (Reuters) – The number of countries receiving Paris Club debt relief this year under a deal with the G20 is expected to rise after the Club – a group of state creditors – clarified the conditions, said a source from the French finance ministry. Tuesday.
The Group of 20 Major Economies and the Paris Club, an informal group of state creditors coordinated by France’s finance ministry, agreed last month to freeze the debt payments of the 77 poorest countries this year in order to free up money to enable them to fight the coronavirus pandemic.
However, some debtor countries have been reluctant to sign, fearing it could hurt their credit rating after rating agencies said a default by private creditors who agreed to suspend debt payments alongside it. the Club could be considered a fault.
Kenya’s finance minister told Reuters last week that this was one of the reasons Nairobi would not apply.
So far, the Paris Club has only signed agreements with the Caribbean islands of Dominica and Grenada, as well as with Mali and Nepal, the French source said.
But the Club has now made it clear that candidate countries can specify that they want relief only on their debts to public creditors.
“We have about 20 more in the process of finalizing documents to sign agreements and we expect another dozen to make requests in the coming days,” the source said.
Countries likely to sign soon are Cameroon, Democratic Republic of Congo, Republic of Congo, Ethiopia, Pakistan and Mauritania, another source close to the matter said.
Usually, the Paris Club asks borrowing governments to seek the same terms for debt repayment from private sector creditors.
Aside from this exception to this rule, rating agencies now understand that the debt relief program is not negative for ratings, the source said.
Countries eligible for the program have a total of $ 36 billion due this year, made up of $ 13 billion owed to other governments, $ 9 billion to private creditors and the remainder to multilateral development lenders. (Reporting by Leigh Thomas; Editing by Kevin Liffey)