Debt Standstill Agreement South Africa

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Debt Standstill Agreement South Africa

Given the seriousness and depth of the challenge that Covid-19 represents, parties with creditor-debtor relationships may have a consensual approach to the unique circumstances that precede them, as we have seen, with mortgage and other leave. If a debtor and a creditor are able to reach a broad agreement between them, this will often take the form of a status quo agreement. The debtor`s ability to continue to exist during each trading period is essential to the success of an out-of-court restructuring. While some debtors may not need third-party funds to continue their operations, many do. In this case, or where additional resources are required during the restructuring process for other justified reasons, the sources are, as a rule, the proceeds from the sale of non-core assets, new investments by shareholders or additional loans from existing creditors (including banks). Unless additional funding is given some priority, it is highly unlikely that funding will be provided and that training can last long enough for a restructuring plan to be fully developed and considered by the creditors concerned. Finally, the G20 agreement also calls on multilateral development banks (MDBs) to continue to consider options for debt service suspension, while maintaining their current rating and low cost of financing. Together, they hold about half of the debt of the mixed countries and IDA, but debt service tends to be lower, as most loans are granted on concession terms. The difficulties are most often operational, as they would need the support of their member countries: as World Bank Group President David Malpass recently stated at a press conference, the MdB believes that this would require full compensation through shareholder contributions13. Indeed, a reduction in debt service could lead to a deterioration in its solvency and, consequently, its financing costs, and threaten its business model. If these difficulties could be overcome, the 2020 forecast would indicate a maximum of $9.2 billion, which would be in addition to the impasse, an order of magnitude equivalent to the private sector`s debt service.

One approach of the IMF is the use of the Recovery and Recovery Disaster (CCRT). The facility provides donor-funded grants to countries to eliminate debt service for IMF loans and free up immediate liquidity. Only 29 countries are eligible, which makes them highly targeted. Recent political reform14 would help countries use this subsidy in the very short term in 2020. On April 13, the IMF`s Executive Board approved debt servicing for IMF loans to 25 countries worth $500 million, the United Kingdom ($185 million), Japan ($100 million) and possibly other countries, including China15. Although this figure is small compared to the overall debt service of multilateral institutions, it is 0.2% of the GDP of this specific group of 25 countries.