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October 28, 2021

Washington, D.C. -- As the global economy continues its uneven recovery amid ongoing uncertainty over the path of the pandemic in many parts of the world, the members of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring met virtually this week for their annual review of progress on implementation of the Principles—a key element of the international sovereign debt architecture. 

Following the meeting, co-Chairs François Villeroy de Galhau, Governor, Banque de France; Dr. Axel A. Weber, Chairman of the Board of Directors, UBS Group AG; and Dr. Yi Gang, Governor, People's Bank of China issued the following statement:

“Although headwinds from the COVID-19 pandemic have begun to fade and financial conditions remain broadly accommodative across mature and emerging market economies, the uneven nature of the global economic recovery continues to weigh on the outlook for capital flows to emerging markets. Following a record number of sovereign defaults in bonded debt in 2020, near-term sovereign debt vulnerabilities across the emerging markets complex have eased significantly and are back to pre- pandemic levels – thanks to abundant central bank liquidity and support from the international financial institutions. However, the more infectious Delta Variant of COVID-19 and insufficient vaccination rates across emerging and developing economies are leading to diverging economic recovery prospects and fiscal outlooks across countries.”

“To help address these uncertainties, public and private sector cooperation through forums such as the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring is vital to developing an appropriate global response. We call for ongoing dialogue among all stakeholders, including both official and private creditors as well as borrowing countries, in line with the recommendations of the Principles.”

The Trustees discussed the 2021 Principles Consultative Group Report on Updating the Principles. Highlighting the changes in sovereign debt markets over the past decade, lessons learned from recent debt restructurings, the emergence of the G20 Debt Service Suspension Initiative (DSSI) and the Common Framework for Debt Treatments beyond the DSSI—alongside the surge in investor interest in ESG considerations, the Trustees welcome the planned update of the Principles, which is expected to be completed by the Spring 2022 World Bank/International Monetary Fund meetings.

With regard to the Voluntary Principles for Debt Transparency, the Trustees welcomed the progress made in creating a data repository and data collection efforts, with thanks to the OECD for its role of host and secretariat and to the UK Treasury and IIF members for providing funding. The Trustees look forward to further updates on the operations of the data repository and the implementation of the Voluntary Principles for Debt Transparency, and to clear indications of private sector support for better debt transparency.

The Trustees also discussed current debt treatments under the Common Framework and received an update on ongoing debt restructuring efforts in Belize, Lebanon, Sudan, Suriname, and Venezuela. The Trustees highlighted the importance of the voluntary guidelines underlying the Principles related to the importance of good-faith negotiations, transparency, and robust borrower-creditor dialogue to support fair debt restructuring.