World Bank warns G20 against doing too little now to address debt problems

World Bank warns G20 against doing too little now to address debt problems
Malpass warned G20 leaders that failing to provide more permanent debt relief to some countries now could lead to increase poverty and a repeat of the disorderly defaults seen in the 1980s. (SPA)
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Updated 21 November 2020

World Bank warns G20 against doing too little now to address debt problems

World Bank warns G20 against doing too little now to address debt problems
  • In Sudan, he said he was hopeful that arrears clearance could move quickly, especially given the inflow of refugees from neighboring Ethiopia
  • G20 leaders are poised to formally endorse extension of a temporary freeze in official bilateral debt payments by the poorest countries

WASHINGTON: World Bank President David Malpass on Saturday warned G20 leaders that failing to provide more permanent debt relief to some countries now could lead to increased poverty and a repeat of the disorderly defaults seen in the 1980s.
Malpass said he was pleased by progress made by the Group of 20 major economies on increasing debt transparency and providing debt relief to the poorest countries, but more was needed.
"Debt reduction and transparency will enable productive investment, a key to achieving an earlier, stronger and more lasting recovery," Malpass told G20 leaders during a videoconference meeting.
"We need to guard against doing too little now, and then suffering disorderly defaults and repeated debt restructurings as in the 1980s," he said.
The so-called 'lost decade' of the 1980s saw many highly indebted countries in Latin America and elsewhere unable to pay their debts, delaying growth and efforts to reduce poverty.
Malpass, who began pushing for debt relief early in the COVID-19 crisis, warned that debt challenges were becoming more frequent, including in Chad, Angola, Ethiopia and Zambia, and failure to provide "more permanent debt relief" left a bleak outlook for reducing poverty.
G20 leaders are poised to formally endorse extension of a temporary freeze in official bilateral debt payments by the poorest countries, and adoption of a common framework for debt restructuring in the future.
Some countries, including China, have remained reluctant to embrace the need for debt cancellation, although top economists say that will likely be needed in some cases. Private sector creditors have also failed to join in, despite repeated calls by G20 leaders, civil society groups and the United Nations.
Malpass said the Bank was working closely with the G20 in countries affected by fragility, conflict and violence, including the Sahel, Somalia, Lebanon, Gaza and the West Bank.
In Sudan, he said he was hopeful that arrears clearance could move quickly, especially given the inflow of refugees from neighboring Ethiopia, which would allow substantial World Bank funding to begin flowing almost immediately.
The United States last month moved to remove Sudan from its list of state sponsors of terrorism, clearing away one of the hurdles facing the heavily indebted African country, which has some $60 billion in external debt. 


EU weighs options as Turkey stand-off grinds on

Updated 4 min 2 sec ago

EU weighs options as Turkey stand-off grinds on

EU weighs options as Turkey stand-off grinds on
BRUSSELS: European Council chief Charles Michel said Friday that Turkey has not de-escalated its stand-off with Greece and warned EU members now need to consider tougher options.
“I think that the cat and mouse game needs to end,” Michel said, referring to Turkey’s repeated incursions into Greek waters with gas exploration vessels.
“We will have a debate at the European summit on December 10 and we are ready to use the means at our disposal,” he added.
Next week’s EU summit will be held in Brussels with leaders meeting face-to-face after videoconferences were held as a coronavirus prevention measure.
One possibility, backed by some members, would be economic sanctions, but many states are not convinced.
EU foreign policy chief Josep Borrell told a conference in Italy “the EU Council will have to take the decision that only the EU can take, because the sanctions regime, it’s a matter for the member states.”
“There are not very many positive signals that came from Turkey during these months — in Cyprus and on the drilling, the talks between Greece and Turkey have not been developing,” he said.
Turkey has been challenging Greece over maritime territory in the Eastern Mediterranean, repeatedly sending a gas exploration vessel into Greek waters.
Both countries are NATO members and the alliance has set up a “de-confliction mechanism” to help avoid accidental military clashes.


But a German-led diplomatic approach to Ankara has made little progress in resolving the underlying issues, and some EU members — notably France and Greece itself — are pushing for stronger action.
Other EU capitals are more cautious, some fearing an escalating stand-off could see Turkish president Recep Tayyip Erdogan’s government once again allow a wave of refugees to head for EU borders.
Michel, who will host the summit, expressed Europe’s frustration.
“In October, after a very dense and strategic high level exchange, we defined a very positive offer to Turkey, we extended our hands,” he told a news conference to mark his first year in office.
“But the condition to move in that area is that Turkey needs to stop unilateral provocations, hostile statements, and the non-respect of international principles and rules-based society.
“Well, since October, things have not been very positive,” Michel noted.
“Since that time, we’ve seen that there have been unilateral acts that have taken place, a hostile rhetoric has been expressed.”
Backed by Turkish navy frigates, the research vessel the Oruc Reis was first deployed in August and again in October to the waters off Kastellorizo island, in defiance of EU and US calls to stop.
It returned to port again in October, but may go back to the disputed zone while Ankara says that, with its long Mediterranean coastline, its claim to sovereign waters in the region is stronger than Greece’s, which is based on its ownership of tiny Kastellorizo.