G20 finance chiefs back measures to fight COVID-19 pandemic in poorest nations

Update G20 finance chiefs back measures to fight COVID-19 pandemic in poorest nations
Finance ministers and bank governors from G20 countries said on Friday they were committed to extending the initiative to suspend debt service payments until June 2021. (G20)
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Updated 13 November 2020

G20 finance chiefs back measures to fight COVID-19 pandemic in poorest nations

G20 finance chiefs back measures to fight COVID-19 pandemic in poorest nations
  • Statement said decision was taken with economic impact of COVID-19 in mind

LONDON: G20 finance chiefs have agreed new measures to help the world's poorest countries fight the coronavirus pandemic.

Finance ministers and central bank governors from the G20 met on Friday under the Saudi presidency to discuss debt relief to vulnerable countries struggling to cope with the impact of the virus that has already claimed almost 1.3 million lives worldwide.

They agreed that extra measures beyond a package of assistance announced earlier in the year may now be required “on a case by case basis.”

The Debt Service Suspension Initiative (DSSI) was originally announced in April during the early days of the pandemic in Europe.

It offered a temporary suspension of "official sector" or government-to-government debt payments to 73 countries but drew criticism from some campaigners who claimed it did not go far enough in alleviating the financial burden of the pandemic on poorer nations.

“We remain committed to implementing the DSSI, in close coordination, to provide maximum support to DSSI-eligible countries,” the G20 said in a statement on Friday. “All official bilateral creditors should implement this initiative fully and in a transparent manner.”

However some debt campaigners have urged stronger measures to tackle the debt crisis by the world's most powerful developed and developing economies.

Tim Jones, head of policy at the UK-based Jubilee Debt Campaign, urged G20 nations to “build a transparent and inclusive system for cancelling debts to a sustainable level across private, bilateral and multilateral lenders.”

The new debt relief principles which are backed by the “Paris Club” of major creditor nations aims to achieve greater participation from private creditors as well as China, a major lender to poor countries.

Earlier this week the Washington-based Institute of International Finance (IIF) wrote to the G20 to say that so far it had only received a few requests for assistance.

“Private creditors remain ready to take part in the extended DSSI upon request from eligible countries,” the IIF said in the letter. “It is clear that the pandemic has increased the risk of debt distress; in such cases private creditors stand ready to engage in good faith on debt treatments that restore long-term debt sustainability.”

Saudi Arabia will host the virtual summit of G20 leaders over two days from Nov. 21, 2020.

Full statement below:

“Given the scale of the COVID-19 crisis, the significant debt vulnerabilities and deteriorating outlook in many low-income countries, we recognize that debt treatments beyond the Debt Service Suspension Initiative (DSSI) may be required on a case-by-case basis.

“In this context, we endorse the “Common Framework for Debt Treatments beyond the DSSI” (Annex I), which is also endorsed by the Paris Club.

“We remain committed to implementing the DSSI, in close coordination, to provide maximum support to DSSI-eligible countries.

“All official bilateral creditors should implement this initiative fully and in a transparent manner.

“We also discussed outstanding issues related to the DSSI and agreed on the extended version of the addendum to the April 2020 DSSI Term Sheet as set forth in Annex II, which is also agreed by the Paris Club.”