MOFCOM suspends debt service payments from Government of Sierra Leone in 2020

In response to the COVID-19 pandemic and the G20 Finance Ministers and Central Bank Governors meeting that took place on April 15, 2020 and on November 13, 2020, the Chinese Government agreed to work with other G20 members to implement the Debt Service Suspension Initiative (DSSI). As part of DSSI, China’s Ministry of Commerce (MOFCOM) and the Government of Sierra Leone signed a debt suspension agreement during calendar year 2020 (most likely between May 2020 and July 2020). Under the terms of the agreement, the lender agreed to suspend principal payments due between May 1, 2020 and December 31, 2020 under one or more interest-free loan agreements. The total suspension amount was $1,209,400. Under the terms of the debt suspension agreement, the lender and the borrower agreed that (1) ‘it shall continue to perform all its obligations […] under the Loan Agreements as supplemented and amended by [the debt suspension agreement]’; (2) ‘it shall use the created fiscal space to increase social, health, or economic spending in response to the COVID-19 crisis […]’ and ‘work closely with the International Financial Institutions who are expected to put in place a monitoring system’; (3) ‘it shall disclose to the Lender all Public Sector Financial Commitments (as defined in the Government Finance Statistics Manual 2014 (GFSM2014)), respecting commercially sensitive information’; and (4) ‘it shall contract no new non-concessional debt during the Suspension Period, other than agreements under the DSSI’.

Additional details

1. AidData assumes that the same basic terms and conditions that governed China Eximbank’s DSSI (debt suspension) agreement with other governments also applied to the DSSI agreement that MOFCOM signed with the Government of Sierra Leone. Illustrative DSSI agreements can be accessed via https://www.dropbox.com/s/huwa695j3w9hwig/DSSI%20Agreement%20for%20Kyrgyz%20Republic.pdf?dl=0 and https://www.dropbox.com/s/67n1oq44it27kvu/3.%20Debt%20Suspension%20Agreement%20for%20GCL%20Other%20Projects.pdf?dl=0 and https://www.dropbox.com/s/n69i598f0fg7s80/6.%20Debt%20Suspension%20Agreement%20for%20PBC%20C2.pdf?dl=0. 2. The total estimated suspension amount is based on the size of the debt service deferral that the Government of Sierra Leone secured from the Chinese Government in 2021 (as recorded by the World Bank's Debtor Reporting System on December 6, 2022).

Number of official sources

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