G7 backs extension of G20 debt freeze, calls for reforms 

The ancient town of Fenghuang in China’s central Hunan province. China has refused to include loans by its state-owned bank in its official bilateral debt totals when dealing with countries seeking debt relief. (AFP)
Short Url
Updated 25 September 2020

G7 backs extension of G20 debt freeze, calls for reforms 

  • Group of Seven ‘strongly regret’ moves by some countries to skip participation in debt relief for world’s poorest nations

WASHINGTON: G7 finance ministers on Friday backed an extension of a G20 bilateral debt relief initiative for the world’s poorest countries, but said it must be revised to address shortcomings hindering its implementation.

In a lengthy joint statement, the ministers from the Group of Seven advanced economies said that they “strongly regret” moves by some countries to skip participation by classifying their state-owned institutions as commercial lenders.

Two officials from G7 countries said the reference was clearly targeted at China, which has refused to include loans by the state-owned China Development Bank and other government-controlled entities in its official bilateral debt totals when dealing with countries seeking debt relief.

The ministers also acknowledged that some countries will need further debt relief going forward, and urged the Group of 20 major economies and Paris Club creditors to agree on terms by next month’s meeting of G20 finance ministers.

“Everyone was disappointed by China’s lack of transparency and commitment,” said one official, who asked not to be named.

At an online meeting hosted by US Treasury Secretary Steven Mnuchin, the ministers underscored their commitment to work together to support the poorest and most vulnerable countries, which have been hard hit by the coronavirus pandemic.

They asked the International Monetary Fund and World Bank to provide regular updates on the financing needs of low-income countries and propose solutions for expected financing gaps, including through instruments to leverage access to private finance.

They said the Debt Service Suspension Initiative (DSSI) approved in April by G20 countries, including China, had helped 43 countries defer $5 billion in official debt service payments to free up money to respond to the pandemic.

But the total is far short of the $12 billion in savings that were initially projected, and represents just over half of the 70-plus countries that were eligible.

The ministers said the initiative should be extended, “in the context of a request for IMF financing,” and called for a new term sheet and memorandum of understanding to improve its implementation.

The ministers said claims classified as commercial under DSSI would also be treated as such in future debt treatments and for implementation of IMF policies, delivering a stern reminder to China and others that have not been fully transparent about the scope and terms of government lending to poor countries.

The ministers also called again on private lenders to implement the debt relief initiative when requested, noting that the absence of private sector participation has limited the potential benefits for several countries. 


Taps and reservoirs run dry as Moroccan drought hits farmers

Updated 22 October 2020

Taps and reservoirs run dry as Moroccan drought hits farmers

  • The problems caused by increasingly erratic rainfall and the depletion of groundwater are growing every year in Morocco

RABAT: Two years of drought have drained reservoirs in southern Morocco, threatening crops the region relies on and leading to nightly cuts in tap water for an area that is home to a million people.

In a country that relies on farming for two jobs in five and 14 percent of its gross domestic product (GDP), the problems caused by increasingly erratic rainfall and the depletion of groundwater are growing every year.

In the rich citrus plantations of El-Guerdan, stretching eastward from the southern city of Agadir, more than half of farmers rely on two dams in the mountains of Aoulouz, 126 km away, to irrigate their trees.

However, that water has been diverted to the tourist hub of Agadir, where mains water has been cut to residential areas every night since Oct. 3 to ensure taps in households did not run entirely dry.

“The priority should go to drinking water,” Agriculture Minister Aziz Akhannouch said in parliament last week.

In El-Guerdan, Youssef Jebha’s crop of clementine oranges has been compromised by reduced water supply, he said, which affects both the quality of fruit and the size of the harvest.

“The available ground water is barely enough to keep the trees alive,” said Jebha, who is head of a regional farmers’ association.

“Saving Agadir should not be at the expense of El-Guerdan farmers,” he added, speaking by phone.

‘We hope for rain’

El-Guerdan is not alone in facing drought. Morocco’s harvest of cereals this year was less than half that of 2019, meaning hundreds of millions of dollars of extra import costs.

Despite lower production, Moroccan exports of fresh produce have risen this year by 8 percent. 

Critics of the government’s agricultural policy say such sales are tantamount to exporting water itself, given the crops use up so many resources.

A report by Morocco’s social and environmental council, an official advisory body, warned that four-fifths of the country’s water resources could vanish over the next 25 years.

It also warned of the risks to social peace due to water scarcity. In 2017, 23 people were arrested after protests over water shortages in the southeastern city of Zagora.

In January the government said it would spend $12 billion on boosting water supply over the next seven years by building new dams and desalination plants.

One $480 million plant, with a daily capacity of 400,000 cubic meters, is expected to start pumping in March, with the water divided between residential areas and farms.

Until then, “We hope for rain,” the agriculture minister said in parliament.

In El-Guerdan, the farmers are digging for water. A new well costs $20,000-30,000. However, “there is no guarantee water can be found due to the depletion of ground reserves,” said Ahmed Bounaama, another farmer.