The Institute of International Finance (IIF) has been greatly encouraged by the swift and decisive action taken to support vulnerable countries as the impact of the COVID-19 pandemic unfolds. In response to the G20 Debt Service Suspension Initiative (DSSI) and calls in the IMFC, Development Committee and Paris Club communiqués for private sector participation, this letter provides an update on IIF activities, shares views from the international financial community, and outlines thoughts on a potential approach to voluntary private sector participation in the DSSI.
Since our letter on April 9, the IIF has reached out to over 100 leading firms that are investing in or lending to countries in scope for the DSSI. Collectively, these firms represent close to $45 trillion in AUM and account for a significant proportion of the external sovereign debt service of in-scope countries in 2020. Our outreach has been primarily via two IIF policy working groups— the public-private Principles Consultative Group and the private sector-only Committee on Sovereign Risk Management (CSRM). Most of these firms are IIF members; many other private creditors and lenders have also contacted us in recent weeks to learn more about the DSSI. Based on these conversations, we believe there is a deep appreciation for the challenges facing these most vulnerable countries and strong interest in finding ways to support them and the proposed debt service suspension. We have also initiated discussions with the official sector—IMF, World Bank, Paris Club, and individual G20 countries—to seek clarification, particularly given the short timelines that have been proposed. The April 28 meeting of the IIF and Paris Club with private creditors allowed for a productive exchange of views and a better understanding of the issues for both sides around participation in the DSSI.
Informed by these discussions, we are garnering private sector support and developing a set of assumptions to underpin core terms of reference for a potential approach to voluntary private sector participation in the initiative.