While the decisive summit of the G20 opened on November 20 in Riyadh, with the prospect of a "historic" agreement on the debt of poor countries, Nicolas Jean, partner at Gide and specialized in project financing and bank and structured financing, in Sub-Saharan Africa and the Maghreb, has agreed to lend itself to the game of questions and answers of our editorial staff. "This historic agreement leads to a harmonized approach to the management of the debts of developing countries, particularly in Africa," explains Nicolas Jean. "One of the objectives of this G20 summit is to endorse the common framework beyond the Debt Service Suspension Initiative (ISSD) adopted on November 13 by the G20 Finance Ministers and Central Banks and the Paris Club."

Decryption of a historic agreement.

In order to benefit from the common framework, ISSD-eligible countries will need to make a formal request that will trigger a sustainability analysis by the IMF and the World Bank. There will certainly be debt restructurings but no cancellation except for the most difficult cases, continues Nicolas Jean, evoking among other examples, the extension of maturities. The participation of creditors such as China, India and Saudi Arabia gives the agreement a historic character. While the debt of emerging countries increased by 11 to 18% in the debt stock of low-income African countries between 2007 and 2018, that of the Paris Club fell by 15 to 3%.

Another historical feature of this agreement is the desire to involve private creditors, who will undoubtedly be encouraged by the "restructuring" option rather than the "cancellation" put forward by the initiators. The IMF is heavily involved in the process, which is responsible for analyzing the debt sustainability of countries seeking debt restructuring. Eligible countries will tacitly have to subscribe to an obligation of transparency and budget management.

As a reminder, Gide is the first international law firm of French origin (see Financial Afrik ranking of the 18 most active firms in Africa). Founded in Paris in 1920, the firm now has 11 offices worldwide. It brings together 500 lawyers, of 35 different nationalities, recognized among the best specialists in each of the branches of national and international business law.