Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the (a) aggregate and (b) per country impacts on debt service costs to the Debt Service Suspension Initiative countries of (i) the planned end of the Debt Service Suspension Initiative in 2022, (ii) the exhaustion of the August 2021 Special Drawing Rights allocation to these countries and (iii) expected increases in global interest rates in 2022.

The Debt Service Suspension Initiative (DSSI) was designed as a short-term initiative to tackle the immediate financing needs of eligible countries. Preliminary estimates suggest that the DSSI has suspended over $12.9 billion in debt service repayments. Recognising that many countries still face debt vulnerabilities at the end of the DSSI the UK, along with the G20, also agreed a new Common Framework for Debt Treatments beyond the DSSI, designed to provide more efficient, equitable and effective debt treatments. The UK is fully committed to implementing the Common Framework in coordination with our international partners.

The UK was a strong proponent of the unprecedented general allocation of $650bn in Special Drawing Rights (SDR) which provided a much-needed liquidity boost to vulnerable countries. SDRs will either be held by countries as reserve buffers or converted into hard currency to support budgetary spending. We welcome the forthcoming IMF report that will review and enhance transparency on the use of SDRs.

As interest rates rise through the year and global financial conditions tighten, the most vulnerable countries (including many DSSI countries) are likely to find it more challenging to meet debt repayments and finance ongoing operations. DSSI-eligible countries that face unsustainable debt burdens should seek debt treatment under the G20’s Common Framework.