The G20 Common Framework for Debt Treatments is a multilateral process, adopted in November 2020, for restructuring the debts of low-income countries owed to government creditors. It was built to replace the temporary Debt Service Suspension Initiative as COVID-era pressures pushed vulnerable economies toward default, and its central innovation was pulling major non-Paris Club lenders, including China, India, and Saudi Arabia, into the same negotiating room as traditional Paris Club creditors for the first time. As of mid-2026, four countries have formally applied: Chad, Zambia, Ghana, and Ethiopia.
Which Countries Can Apply
Eligibility mirrors the Debt Service Suspension Initiative. A country qualifies if it is one of the 78 nations classified as IDA-eligible by the World Bank’s International Development Association, defined primarily by a gross national income per capita below $1,325 for fiscal year 2026,1International Development Association. IDA Borrowing Countries or if it appears on the United Nations’ list of Least Developed Countries.2Paris Club. Debt Service Suspension Initiative Term Sheet That alone isn’t enough. The country must also show that its debt is unsustainable or that it faces a serious liquidity crisis.
That determination runs through the IMF-World Bank Debt Sustainability Framework, which sorts countries into four risk tiers: low, moderate, high, and in debt distress. A country rated in debt distress has already experienced an event such as arrears or restructuring, or one is imminent.3International Monetary Fund. IMF-World Bank Debt Sustainability Framework for Low-Income Countries Countries at high risk of distress can also petition. Even meeting the threshold only triggers a right to apply; the framework is explicitly case-by-case.
What Has to Be in Place Before Applying
Before creditors will talk, the debtor country must be in advanced discussions toward a Staff Level Agreement with the IMF for an upper credit tranche program, typically an Extended Credit Facility or Extended Fund Facility arrangement. That IMF program is the macroeconomic anchor creditors require before they will consider restructuring.4G20. G20 Note – Steps of a Debt Restructuring Under the Common Framework
The formal request goes to the country’s official bilateral creditors, with Paris Club members notified through the Chair of the Paris Club.4G20. G20 Note – Steps of a Debt Restructuring Under the Common Framework Alongside it, the debtor must compile detailed data on all public and publicly guaranteed debt owed to every category of creditor: outstanding stock, loan-by-loan terms (interest rates, repayment schedules, grace periods), the full list of external creditors, and historical debt service including any arrears. That data is later reconciled against what creditors themselves report, and any mismatch can stall negotiations.
The analytical centerpiece is the Debt Sustainability Analysis conducted jointly by the IMF and World Bank. It projects the country’s economic trajectory and determines how much debt the country can realistically carry over the coming decade, defining the “restructuring envelope,” the total amount of relief needed to restore sustainability. Every creditor’s offer is measured against that envelope.4G20. G20 Note – Steps of a Debt Restructuring Under the Common Framework
How Official Creditors Negotiate
Once a request is accepted, the creditors form an Official Creditor Committee. It includes representatives from all G20 and Paris Club members that hold claims against the debtor. The defining feature of the framework is that non-Paris Club creditors like China, India, and Saudi Arabia sit at the same table as traditional Paris Club members. Before 2020, those creditors negotiated separately or not at all, which made coordinated relief nearly impossible.
The committee’s job is to negotiate a Memorandum of Understanding with the debtor. The MoU sets the main parameters of the treatment: interest rate reductions, changes to amortization schedules, maturity extensions, grace periods, and any nominal debt reduction.4G20. G20 Note – Steps of a Debt Restructuring Under the Common Framework It also typically includes a comparability of treatment clause, an information-sharing clause, and a claw-back clause that can tighten terms if the debtor’s economic situation improves beyond projections. All creditors on the committee commit to the same terms, which stops any one creditor from cutting a better side deal.
How Long Negotiations Actually Take
The framework sets no fixed timeline, and the four cases so far show how slow the process can be. Chad requested treatment in December 2020 and signed its MoU in January 2023, roughly two years later. Zambia requested in February 2021 and signed in April 2024, over three years. Ghana requested in December 2022 and completed its MoU in January 2025. Ethiopia requested in February 2021 and signed its MoU in July 2025, more than four years after applying.4G20. G20 Note – Steps of a Debt Restructuring Under the Common Framework In each case, the final step from agreement on main terms to formalized MoU took only three to four months. Everything before that (forming the committee, reconciling debt data, agreeing on the size and shape of relief) is where the years go.
Comparability of Treatment for Private Creditors
The framework requires that private creditors provide relief at least as favorable as what official creditors agree to in the MoU. This principle of comparability of treatment exists to prevent taxpayer-funded government relief from flowing through the debtor to pay private bondholders and banks in full.5Paris Club. Common Framework The debtor is responsible for negotiating with its private creditors, usually through bondholder committees and financial advisors.
Comparability is assessed using several metrics. Net present value reduction is the preferred measure because it captures the combined effect of interest rate cuts, maturity extensions, and any nominal haircuts.6World Bank. Achieving Comparability of Treatment Under the G20s Common Framework Duration extension and cash-flow relief during the IMF program period are also used, and the Paris Club applies a single discount rate across all creditors so the comparison is like-for-like.
Enforcement is the framework’s weakest link. Nothing legally forces private creditors to accept the terms. If bondholders refuse an exchange offer, the debtor can fall back on collective action clauses in bond contracts, which allow a supermajority of holders to bind everyone to restructured terms. But if official creditors demand deep haircuts and bondholders see the terms as unfair, participation may fall below the CAC threshold and the deal can fail. Holdouts who refuse can sue for full repayment, a strategy with a long history in sovereign debt litigation, and the framework offers no sovereign bankruptcy mechanism to discharge unpaid claims.
From MoU to Binding Bilateral Agreements
The MoU is a political commitment, not a legal contract. To become enforceable, its terms have to be translated into separate bilateral agreements between the debtor and each individual creditor. Each contract adapts the MoU’s parameters to the specific loans that creditor holds, locking in new repayment schedules, interest rates, grace periods, and maturity dates. These agreements are then reported to the IMF and other monitoring bodies.5Paris Club. Common Framework
This phase can itself drag on for years. Zambia signed its MoU in April 2024, but as of late 2025 only four bilateral agreements (with China, France, India, and Saudi Arabia) had been completed, with additional signatures still pending.7International Monetary Fund. Zambia – Sixth Review Under the Extended Credit Facility Until those bilateral agreements are signed, the restructured debt service schedule cannot begin, so the debtor keeps operating under financial strain even after the headline deal is announced.
What the Four Cases Have Produced
Only Chad, Zambia, Ethiopia, and Ghana have formally applied for treatment under the Common Framework.5Paris Club. Common Framework Their outcomes give a sense of what the framework can and can’t deliver.
Chad
Chad was first to complete the process, reaching its MoU in January 2023. Creditors, including the commodity trader Glencore as the largest private creditor, concluded that high oil prices at the time made debt reduction unnecessary. The agreement rescheduled repayments but provided no nominal debt reduction, drawing criticism from development organizations who argued the deal left Chad’s debt service burden largely intact and continued to crowd out spending on health, education, and food security.
Zambia
Zambia’s case produced the framework’s most substantive relief so far. The Official Creditor Committee agreement, reached in June 2023, covered $6.3 billion in bilateral debt and delivered a net present value reduction of nearly 40 percent. Interest rates were set at 1.0 percent for 14 years, rising to no more than 2.5 percent afterward. The deal was projected to save $5.0 billion in debt service between 2023 and 2031.8Center for Global Development. Zambia – A Case Study of Sovereign Debt Restructuring Under the G20 Common Framework Private bondholders followed in March 2024, agreeing to write off approximately $840 million and providing roughly $2.5 billion in cash-flow relief during the IMF program period. The weighted average maturity on new bonds was 15 years under the base case.
Ghana
Ghana reached its agreement with official creditors in January 2024, providing significant cash-flow relief during the IMF program period. The deal was a prerequisite for the IMF Executive Board to approve a $600 million disbursement, which in turn unlocked $300 million in World Bank financing and $250 million in financial sector support.9Ministry of Finance Ghana. Ghana Reaches Agreement with Official Creditors on Debt Treatment Under the G20 Common Framework Ghana’s MoU was finalized in January 2025, and bondholder negotiations ran in parallel. Without the creditor deal, the IMF review stalls; without the IMF review, World Bank money stays locked.
Ethiopia
Ethiopia’s application, filed in February 2021, was complicated by the civil conflict in Tigray and the disruption to economic policymaking that followed. The country reached an agreement in principle with its Official Creditor Committee in March 2025 and formalized the MoU in July 2025, offering relief of over $3.5 billion.10Ministry of Finance (Ethiopia). The Ethiopian Government Concludes Memorandum of Understanding with Its Official Creditor Committee Under the G20 Common Framework Bilateral agreements are now being signed individually; Ethiopia and Italy completed theirs in March 2026.11Ministry of Finance (Ethiopia). Ethiopia and Italy Strengthen Strategic Partnership with Debt Restructuring Agreement The four-plus-year timeline from request to MoU makes Ethiopia the slowest case so far.
Why the Process Is So Slow
The IMF acknowledged early on that each of the first three cases experienced “significant delays,” driven in part by the same coordination problems the framework was created to solve.12International Monetary Fund. The G20 Common Framework for Debt Treatments Must Be Stepped Up
The most frequently cited obstacle is coordinating with China, now the largest bilateral creditor to many low-income countries. Chinese lending is spread across multiple institutions, including the Export-Import Bank of China, the China Development Bank, and various state-owned enterprises, each reporting to different parts of the government. There is no single decision-maker. China also favors a loan-by-loan approach, evaluating the sustainability of individual projects rather than the debtor’s overall solvency, which conflicts with the Paris Club tradition of treating a country’s debt situation as a whole.13Center for Global Development. China and the Common Framework – Understanding the Motives Behind Debt Relief Provision to Low-Income Countries Some Chinese loan contracts with African borrowers contain clauses that explicitly prohibit the borrower from including the debt in Paris Club restructuring or comparable treatment, a direct contractual barrier to the framework’s core mechanism.
The IMF has proposed several reforms: clearer timelines for each step, earlier engagement between official and private creditors, a comprehensive debt service standstill during negotiations to give the debtor breathing room, and stronger enforcement of comparability of treatment. There has also been discussion of expanding eligibility beyond the current DSSI-eligible pool to include other highly indebted countries, though no formal expansion has occurred.
One boundary worth noting: debt-for-development swaps, where relief is tied to spending on climate or biodiversity goals, are sometimes discussed alongside the framework, but G20 guidance is explicit that they cannot replace comprehensive debt restructuring and are not appropriate for countries in active debt crises.14G20 Brazil. G20 Presidency Note on Debt-for-Development Swaps They complement a restructuring; they don’t substitute for one.