G20 ‘falls short’ on relief extension

Anuj Chopra – G20 nations announced a six-month extension Wednesday to a debt suspension initiative for poor countries ravaged by the coronavirus pandemic, falling short of calls by the World Bank and campaigners for a full-year renewal.

The 20 most industrialised nations had pledged in April to suspend debt service from the world’s most vulnerable countries through the end of the year as they faced a sharp economic contraction caused by the Covid-19 pandemic.

The initiative will now be extended until the end of June next year, G20 finance ministers and central bankers said after a virtual meeting as they also agreed on a “common framework” to individually deal with poor nations distressed by rising debt.

In its final statement after the meeting, the group said the DSSI could be further extended until the end of 2021 when the IMF and World Bank meet next spring “if the economic and financial situation requires” the move.

The group pledged to publish the common framework ahead of the G20 leaders’ summit in November.

CHINA

The agreement on the framework marks a leap for China, a major creditor to poor countries that officials say has resisted attempts to write off debts.

Campaigners warn of a looming debt crisis across poverty-wracked developing nations.

The World Bank on Monday said the debt of the world’s 73 poorest countries grew 9.5% last year to a record US$744 billion.

The countries’ debt burden owed to government creditors, most of whom are G20 states, reached US$178 billion last year, and China is owed more 63% of that.

The G20 announcement came a day after the IMF said the global economy would contract 4.4% in 2020 and the damage inflicted by the pandemic would be felt for years. – Nampa/AFP