The Debt Service Suspension Initiative (DSSI) was endorsed by G20 finance ministers and the Paris Club in April 2020 in response to the fiscal shock of the COVID-19 pandemic on low-income countries. It allowed eligible borrowers to suspend principal and interest payments owed to official bilateral creditors, redirecting those resources toward health systems and social spending.
Key features:
- Eligibility covered 73 countries: IDA-eligible economies plus least developed countries as defined by the UN, provided they were current on IMF and World Bank obligations and had requested participation.
- Creditor coverage included G20 and Paris Club bilateral official creditors. Notably, China participated for the first time in a coordinated multilateral debt relief effort, though it classified some loans (e.g., from China Development Bank) as commercial rather than official.
- Private creditors were encouraged to participate on comparable terms but largely did not, citing concerns about credit ratings and legal complexity. This became one of the initiative's most criticised gaps.
- Multilateral lenders (IMF, World Bank) were excluded from the suspension to preserve their preferred-creditor status and lending capacity.
According to World Bank figures, 48 of the 73 eligible countries participated, and roughly US$12.9 billion in debt service was suspended between May 2020 and the initiative's expiry in December 2021.
The DSSI was widely seen as insufficient for countries facing solvency rather than liquidity problems. To address deeper restructuring needs, the G20 launched the Common Framework for Debt Treatments beyond the DSSI in November 2020, which has since been applied to cases including Chad, Zambia, Ethiopia, and Ghana — with mixed results and prolonged negotiations.
For MUN and policy researchers, DSSI is a useful case study in coordinating heterogeneous creditors (Paris Club, China, private bondholders) and in the limits of liquidity relief absent deeper sovereign debt restructuring mechanisms.
Example
In 2021, Zambia — which had defaulted on a Eurobond in November 2020 — was among the DSSI participants before transitioning to the G20 Common Framework for a fuller debt restructuring.
Frequently asked questions
73 low-income countries — IDA-eligible borrowers plus UN-designated least developed countries — that were current on their IMF and World Bank obligations.
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