"According to the payment due data published by the World Bank, only five of the 22 countries that Fitch evaluates and that are eligible to participate in the DSSI would see the funding requirements for this year reduced by more than 1 percent, with the benefit for Angola, with 4.3 percent, by far the highest," reads a report on the impact of the accession of the most vulnerable countries to the G20 initiative.
In the document, sent to investors and to which Lusa had access, Fitch Ratings says that of these countries (Angola, Mozambique, Republic of Congo and Laos), only Laos did not apply for the initiative organized in April and intends to suspend bilateral official debt payments until the end of this year, and that in November it may be extended to the end of 2021 due to the effects of the pandemic on the most fragile economies.
According to data, Angola may stop paying 2.6 billion dollars in debt payments this year alone, which corresponds to 3.1 percent of last year's GDP.
"An extension of the G20 DSSI to emerging market countries is likely, possibly at the November meeting, which would amplify the benefits of this initiative," write the analysts at Fitch Ratings, owned by the same owners as Fitch Solutions.
So far, more than 40 countries, including the Lusophone Cape Verdeans, São Tomé and Príncipe and Angola, have asked to participate in this initiative, which does not cover debt to private creditors, which would have to be treated separately.
"The G20 encouraged private sector investors to provide debt relief along lines similar to those provided under the DSSI, but this is not a requirement for participation," Fitch noted, adding that "so far none of the countries participating in the DSSI have said publicly that they would seek similar treatment of private creditors, which reflects, in part, concerns about access to financial markets.
With the exception of Moody's, the other two major financial rating agencies consider that participation in the initiative does not necessarily imply a downgrade, but Moody's argues that participation implies a weakening of the financial position and therefore a downgrade.
"DSSI focuses only on debt to official creditors, which is not covered by Fitch's definition of default," analysts point out.
