The Common Framework and its Discontents

The Common Framework is the internationally agreed process for coordinating the restructuring of the debt of low‐income countries. To date, this process, which was established by the G20 in late 2020 during the COVID‐19 pandemic, has failed to provide an efficient path toward agreement with new bilateral creditors (such as China), market creditors and the traditional bilateral creditors. An analysis of the key country cases demonstrates how tensions between different creditors have complicated the application of the Common Framework and delayed agreement on new financial terms. The Common Framework was built on a case‐by‐case judgement of the scale of debt relief needed. It has become a case‐by‐case negotiation on the format for carrying out a restructuring, as well as the terms of the restructuring. China's participation in official creditor committees, the clear innovation in the Common Framework, has proved to be a source of delay rather than a mechanism for creating consensus. Almost three years after the initial agreement on the Common Framework, there still is no model for an internationally coordinated restructuring that both delivers significant debt relief and includes the Chinese policy banks.