UPSC Prelims 2022 Q4: Current Affairs – International Organisations & Groupings
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: (c) Both 1 and 2
Explanation
G20 Common Framework for Debt Treatments (2020)
| Detail | Fact |
|---|---|
| Endorsed | November 2020 by the G20 together with the Paris Club |
| Built on | The Debt Service Suspension Initiative (DSSI) of the COVID period |
| Who can use it | 73 low-income countries eligible for DSSI with unsustainable debt |
| Main feature | Brings in non-Paris Club lenders like China and India alongside traditional creditors |
| Cases | Chad, Zambia, Ethiopia, Ghana |
Checking the statements:
| Statement | Verdict |
|---|---|
| 1. Endorsed by the G20 together with the Paris Club | Correct |
| 2. Supports low-income countries with unsustainable debt | Correct |
Answer: (c) Both 1 and 2.
Why each option is right or wrong
- (a) Incorrect. It leaves out Statement 2; supporting debt-stressed low-income countries is the framework's purpose.
- (b) Incorrect. It leaves out Statement 1; the framework was agreed by the G20 and the Paris Club.
- (c) CORRECT. The G20 and Paris Club endorsed it in 2020 to help low-income countries with unsustainable debt.
- (d) Incorrect. Both statements describe the Common Framework accurately.
Key point
G20 Common Framework (Nov 2020): G20 + Paris Club; debt relief for low-income countries; brings China into restructuring.
Remember
The G20 Common Framework, endorsed with the Paris Club, helps low-income countries with unsustainable debt.
Common mistakes
- Thinking the Paris Club was not involved; the framework was endorsed jointly.
- Confusing the Common Framework with the earlier DSSI, which only paused payments.
- Assuming it covers middle-income countries like Sri Lanka; it is for DSSI-eligible low-income countries.
Exam tip
DSSI paused debt payments; the Common Framework restructures debt. Both came from the G20 in 2020.
Sources
- G20 Riyadh Summit (2020) — Common Framework for Debt Treatments beyond the DSSI
- International Monetary Fund — The G20 Common Framework for Debt Treatments beyond the DSSI (factsheet)