Here is Question No. 4 a part of our series on UPSC Prelims 2022.
Q4. With reference to the “G20 Common Framework”, consider the following statements:
- It is an initiative endorsed by the G20 together with the Paris Club.
- It is an initiative to support low-income countries with unsustainable debt.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer – C
- To address the problem of unsustainable debt levels, the G20 reached an agreement in November 2020 on a Common Framework for Debt Treatments.
- Statement 1 is correct: The Common Framework for debt treatment beyond the DSSI (Common Framework) is an initiative endorsed by the G20, together with the Paris Club.The G20 recently announced the agreement in principle of a “Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI)”. The framework aims to address the problem of unsustainable debts faced by many countries in the aftermath of the Covid-19 pandemic. The agreement includes all members of the G20 and the Paris Club. Club.
- Statement 2 is correct: The Common Framework for debt treatment beyond the DSSI (Common Framework) is an initiative to support, in a structural manner, Low-Income Countries with unsustainable debt. The Common Framework considers debt treatment, on a case-by-case basis, driven by requests from eligible debtor countries. In response to a request for debt treatment, a Creditor Committee is convened. Negotiations are supported by the IMF and the World Bank, including through their Debt Sustainability Analysis. The Common Framework for debt treatment beyond the DSSI (Common Framework) is an initiative endorsed to support, in a structural manner, low-income countries with unsustainable debt. It is a way to temporarily ease the financing constraints for these countries and free up scarce money that they can instead use to mitigate the human and the economic impact of the COVID-19 crisis.
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