G-20 suspends debt payments of poor nations for six more months
The Group of 20 nations, representing the world’s largest economies, agreed on October 14 to extend the suspension of debt payments for another six months to support the most vulnerable countries in their fight against the coronavirus pandemic.
The suspension of what the G-20 says it can ease $ 14 billion in debt repayment was due to expire at the end of the year. The October 14 decision gives developing countries until the end of June 2021 to focus their spending on health care and emergency stimulus programs rather than paying down debt.
The G-20 announcement was made initially on Twitter at a meeting of the group’s finance ministers and central bank governors, and then confirmed at a press conference. The virtual talks take place at the start of this week’s meetings of the International Monetary Fund and the World Bank, which bring together 189 countries, which are also taking place virtually due to the coronavirus pandemic.
International aid groups have expressed disappointment at the lack of debt relief by extending the moratorium on debt payments for a full year or forgiving part of the debt rather than simply suspending payments .
“This pandemic has exposed a blatant and unfair double standard: the world’s richest countries follow one set of rules and the world’s poorest follow another,” said David McNair, executive director of global policy at ONE, an international aid group.
G20 officials have argued that aid is helping 46 of 73 eligible countries with ongoing efforts to scale up aid.
Some critics have also complained that China has opposed parts of the debt relief plans that have been put forward.
“It is unfortunate that the urgent need for broader debt relief for poor countries is thwarted by the apparent reluctance of China, which has become a major creditor,” said Eswar Prasad, professor of economics at the ‘Cornell University and former Director of the IMF. China division. “China has proven to be a reluctant participant in multilateral debt relief efforts, putting narrow economic and geopolitical interests ahead of a collective approach to ease the burden on poor countries.”
“We still need to do more,” admitted Mohammed al-Jadaan, Saudi Arabia’s finance minister, this year’s G-20 chairman, at a press conference after the October 14 meeting. “We must ensure that these nations are fully supported in their efforts to combat the COVID-19 pandemic.… We have agreed to extend the debt service suspension initiative for six months.
Al-Jadaan said there will be further discussions at the April meetings to decide whether the suspension should be extended for another six months. He stressed that the pandemic has threatened the fiscal stability of many countries, especially the poorest.
Al-Jadaan said another meeting of finance ministers will be held practically next month, ahead of the leaders’ summit on November 21-22. He said the goal will be to agree on a framework that goes beyond even the current debt suspension initiative. He did not develop. The United States is represented at G-20 finance meetings by Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell.
Transparency International, Amnesty International and a collective of groups called CIVICUS had written to G-20 finance ministers ahead of their meeting to warn them that the world is facing an unprecedented crisis in the last century and that debt suspension is not is just a first step. . Although the global economy has started a gradual recovery with the reopening of businesses and borders, the recovery has been very uneven.
The groups said many of the poorest countries still spend more on debt payments than on life-saving public services. They urged the G-20 countries to suspend debt payments until at least 2021. Some countries, like Pakistan, have called for outright cancellation of debt payments.
Oxfam International said it believed the six-month extension was “the bare minimum the G-20 can do.”
“Failure to cancel debt payments will only delay the debt tsunami that will engulf many of the world’s poorest countries, leaving them unable to afford the investment in health care and safety nets. social support they desperately need, ”said Jaime Atienza, an Oxfam official. who manages the debt policy.
Oxfam and other groups are also calling on private lenders and investment funds to make similar concessions for poorer countries by suspending debt repayment.
The G-20, in a final statement, also urged private lenders to join its debt suspension initiative.
“We are disappointed with the lack of progress in the participation of private creditors ‘in debt relief’ and strongly encourage them to participate on comparable terms when eligible countries request it,” he said.