Debt Suspension Clause Alliance: Breathing Space for Sovereign Borrowers in Crisis

In a landmark move to aid countries facing crises, a group of wealthy creditor nations and multilateral lenders has launched the Debt Suspension Clause Alliance, announced by Spain on Tuesday.

Launched during a U.N. conference in Seville, the initiative seeks to incorporate clauses in public and commercial lending for temporary suspension of debt payments during extraordinary events. The measure aims to give countries fiscal flexibility during crises, said Spain's economy minister Carlos Cuerpo.

Among the leaders of this initiative are Canada, France, and Britain, alongside major multilateral banks. The Inter-American Development Bank noted that similar clauses are already protecting $3.2 billion, and the European Investment Bank has made these clauses available to 70 developing countries.

(With inputs from agencies.)