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UPSC Prelims 2022

G20 Common Framework and Paris Club - UPSC Prelims 2022 Question

Prelims General Studies Paper - 1

Jan 10, 2023

2 min read

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Question

 

With reference to the “G20 Common Framework”, consider the following statements:

 

1. It is an initiative endorsed by the G20 together with the Paris Club. 

 

2. 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

 

The correct answer is C. Both 1 and 2.

 

1. The G20 Common Framework for debt treatment beyond the DSSI (Common Framework) is an initiative endorsed by the G20, together with the Paris Club, to support, in a structural manner, Low Income Countries with unsustainable debt. Paris Club is separate from G20, it is a forum of official creditors who negotiate with debtor countries to reschedule or forgive debt, usually in exchange for economic policy changes.

 

2. The G20 Common Framework is an initiative to support Low-Income Countries with unsustainable debt. The initiative aims to ensure that these countries are able to continue to access financing during the COVID-19 pandemic, while also addressing the challenges posed by their debt burdens. It includes a package of debt treatments, which includes relief on debt service, extended maturities and/or a reduction in the stock of debt, to help these countries cope with the economic impact of the pandemic. It provide common procedures and approaches to debt treatments, with the involvement of all creditors including private sector, and the aim of ensuring that countries can continue to access financing while addressing their debt challenges.

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