1.
Debt relief, climate and
nature in Covid recovery
Professor Stephany Griffith-Jones
sgj2108@columbia.edu

2.
Structure and level of African
debt
 IMF projected public debt-to-GDP ratio in EMDEs to
increase by c 10% due to impact of Covid-19 crisis, to about
65% of GDP by end of 2021, highest level ever
 UN SG Guterres said “response to COVID and financial
aspects of the crisis too limited in scope and too late”
Lessons of history
 Desirable LICs and vulnerable MICs, with unsustainable
debt burdens should be given sufficient debt relief, and that
at least part of that relief should be channelled to a low-
carbon and inclusive recovery

3.
Major change in the structure of
African external public debt
• Share of African bilateral debt almost halved in last two
decades. In 2000, bilateral lenders, (mostly Paris Club) held
52% of Africa’s external debt, by end 2019, share fell to 27%
• Rise of China as major creditor
• Commercial creditors accounted for 40% of Africa’s total
external debt end of 2019 compared with 17% in 2000
(AfDB,2021)
• Three top creditors to Africa since 2015 are bondholders (27
% of external debt end 2019), China (13 %), the World
Bank-IDA (12 %)

4.
Low income countries’ debt
 During the last decade, share of total debt as a
proportion of GNI grown for both LICs and LMICs
 Debt owed to private creditors less important in LICs (c
12% in 2015-2019 ), than in LMICs
 China more than doubled its exposure to LICs between
the first and second half of the decade, by more than
130 %, becoming second largest creditor(Griffith-Jones
and Carreras,forthcoming)

5.
Policy conclusions 1
 Key lesson from history of debt relief should be:
sufficiently large + timely, to avoid lost decades to
development, undermine SDGs
 A new element, in the light of the climate emergency
globally and high inequality in most countries is the link
between debt relief and sustainable + inclusive
development
 Part of debt relief linked to programs oriented to
transform debtor economies into greener and fairer
ones

6.
Policy conclusions 2
 Sufficient debt reduction for countries needing debt relief in LMIC
Africa needs equal treatment public and private creditors to avoid
part debt relief given public creditors used servicing debt private
creditors
 Securing debt relief from private creditors may require both carrots
and sticks. Former may include credit enhancement, eg could be
from WB-IDA or African Development Bank
 For most LICs, esp those that not raised bonds, debt relief from
private creditors seems relatively marginal, may be desirable focus
efforts of debt relief on public creditors
 Essential any debt relief includes Chinese creditors in equivalent
ways, to other public creditors.

7.
Policy conclusions 3
 Common Framework, positive step, needs to be
transformed to allow comprehensive debt relief for green +
inclusive recovery to help LICs and vulnerable MICs
respond to COVID, recover, + invest increased resilience
and development.
 All LICs and MICs , whose debt considered unsustainable,
should be supported to participate in debt restructuring.
 Governments receiving debt relief would need to commit to
reforms and investments that align their policies and
budgets with the 2030 Agenda for Sustainable Development
and the Paris Agreement.