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
Show answer
Explanation
The correct answer is C, Both 1 and 2. The Common Framework for Debt Treatments was agreed by the G20 and the Paris Club in November 2020 to help low-income countries with unsustainable debt.
During the COVID-19 crisis many poor countries could not service their loans. The G20 first offered the Debt Service Suspension Initiative (DSSI), which only postponed payments. The Common Framework went further: it lets eligible countries (those eligible for the DSSI) seek a full restructuring of their official bilateral debt, with all G20 creditors, including newer lenders outside the Paris Club such as China and India, negotiating together on comparable terms. The Paris Club is an informal group of major creditor countries that coordinates solutions for debtor nations.
A is wrong because statement 2, its purpose, is also correct.
B is wrong because the framework was indeed endorsed by the G20 together with the Paris Club.
D is wrong because both statements describe the framework correctly.
Exam tip: DSSI postponed debt payments; the Common Framework (2020) restructures debt of low-income countries.