G20 accepts additional 6-month debt suspension for poor countries | Coronavirus pandemic News
The Group of 20 nations, representing the world’s largest economies, has agreed 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 G-20 says the extension will provide continued relief for the $ 14 billion in debt repayment that would otherwise be due at year-end. Wednesday’s 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 that debt relief will not be provided 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 efforts underway to scale up.
Some critics have also complained that China is opposing 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 Wednesday’s meeting. “We need to make sure that these countries are fully supported in their efforts to tackle the COVID-19 pandemic. … We 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 virtual meeting of finance ministers is scheduled for next month, ahead of the leaders’ summit on November 21-22, and that it will aim to agree on a framework that goes beyond even of the current debt suspension initiative. He did not develop.
Transparency International, Amnesty International and a collective of groups called CIVICUS had written to G-20 finance ministers ahead of their meeting to warn that the world is facing an unprecedented crisis in the last century and that debt suspension is not only a first step. Although the global economy has begun a gradual recovery with the reopening of businesses and borders, the recovery has been very uneven.
The groups urged the G-20 countries to suspend debt payments until at least 2021, saying many of the poorest countries still spend more on debt payments than on vital public services. 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 investments in health care and social safety nets. which they desperately need, ”said Jaime Atienza, an Oxfam official who manages 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 involving private creditors” in debt relief, “and strongly encourage them to participate on comparable terms when eligible countries request it,” he said. .