What the Sovereign Debt Framework Means for Infrastructure Projects

The G20 Common Framework for Debt Treatment was designed to bring order to sovereign debt restructuring for low-income countries. Three years on, it has produced more frustration than relief — but infrastructure financing across Africa is still navigating its terms.

 

The problem it was meant to solve

When a country cannot service its external debt, it needs a structured process to negotiate relief with creditors. Historically, this happened through the Paris Club — a group of major creditor nations. But the rise of China, private bondholders, and multilateral lenders as major creditors created a more complex landscape the Paris Club wasn’t built to handle.

 

What the Common Framework does

The framework, agreed in 2020, extends the Paris Club’s approach to include non-Paris Club bilateral creditors — primarily China — alongside private lenders. The idea is comparability of treatment: all creditor classes take similar haircuts.

**The problem with infrastructure debt**

Infrastructure loans — roads, ports, power — are often tied to specific assets with long repayment horizons. Chinese infrastructure loans, in particular, frequently include “resource-backed” clauses or collateral arrangements that complicate standard restructuring.

**Where things stand**

Zambia completed a landmark restructuring under the framework in 2023. Ghana is in process. Ethiopia remains stalled. Each case reveals a different fault line in the framework’s architecture.

**The bottom line**

The Common Framework is imperfect but consequential. For governments planning major infrastructure projects, understanding its terms — and the leverage dynamics they create — is essential due diligence.