In the wake of the COVID-19 pandemic, debt problems of developing countries are a major challenge. Dr. Niels Keijzer and Dr. Kathrin Berensmann working at the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) initiated an event in March 2021 in cooperation with the European Commission’s Directorate General for International Partnerships and the European Think Tanks Group (ETTG). Discussions were held on how the European Union (EU) can contribute to solving the debt crises in developing countries. As a long-time donor of concessional finance in developing countries, the international community, including the EU, has a shared interest in supporting these countries. The EU recognizes this responsibility and on 30 November 2020, adopted Council Conclusions committing to support international debt restructuring and relief efforts for African countries. The EU has also supported the G20 and Paris Club’s Debt Service Suspension Initiative (DSSI) and the G20 and Paris Club’s Common Framework for Debt Treatments beyond the DSSI. In addition, the EU decided to contribute 183 million euro to the International Monetary Fund’s (IMF) Catastrophe Containment and Relief Trust to provide debt relief on IMF loans to the poorest and most vulnerable countries.
During a presentation and panel discussion, Dr. Kathrin Berensmann explained what further EU action is needed to prevent and resolve debt crises in developing countries. These include, for example, implementing debt restructuring and linking it to sustainable goals under the Common Framework for Debt Treatments beyond DSSI, providing technical assistance by EU countries to their partner countries on debt management, building national financial markets, and disclosing EU countries’ loan agreements with their partner countries.
A video recording of the event and the presentations are available on the European Commission’s website.