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Pay Later: G20 Extends Debt Relief for Developing Countries

October 16, 2020, 07.22 PM

"We must ensure these nations are fully supported in their efforts to tackle the Covid-19 pandemic... We have agreed to extend the debt service suspension initiative by six months.”

Al-Jadaan said there will be further discussions at April’s spring meetings to decide whether the suspension should be extended for an additional six months.

He stressed that the coronavirus pandemic has threatened the fiscal stability of many countries, particularly the poorest.

Read also: IMF: Indonesia Economy to Contract 1.5 Percent Next Year due to Covid-19

Al-Jadaan said that another finance ministers’ meeting will be held virtually next month, before 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 elaborate.

The United States is represented at the G20 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 the G20 finance ministers ahead of their meeting to warn that the world is facing a crisis unlike any in the last century and that debt suspension is only a first step.

Though the global economy has begun a gradual recovery since the start of the coronavirus pandemic with the reopening of businesses and borders, the recovery has been sharply uneven.

Read also: World Economy Faring Better but Crisis Far from Over, says IMF Chief

The groups said that many of the poorest countries are still spending more on debt payments than on life-saving public services.

They urged the G20 nations to suspend debt payments at least through 2021. Some countries, like Pakistan, have called for an outright cancellation of debt payments.

Oxfam International said it believes that the six-month extension for developing countries was “the bare minimum the G20 could do”.

“The failure to cancel debt payments will only delay the tsunami of debt that will engulf many of the world’s poorest countries, leaving them unable to afford the investment in healthcare and social safety nets so desperately needed,” said Jaime Atienza, an Oxfam official who manages debt policy.

Read also: Getting Stronger: Indonesia's Recovery from Dutch Legacy of Severe Debt


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