G-20 stops short of extending debt freeze for poorest nations

WASHINGTON • Finance officials from the Group of 20 (G-20) countries have called for all official bilateral creditors to implement fully a short-term debt freeze for the world's poorest countries, but stopped short of extending the initiative into next year.

Sources briefed on the G-20 meeting last Saturday said there was strong support for extending the standstill beyond the end of this year, given the severity of the economic fallout from the coronavirus pandemic.

However, the group's final communique said only that the issue would be considered in the second half of this year.

It also said nothing about growing calls for cancelling - not just deferring - the debts of some of the poorest countries.

The Debt Service Suspension Initiative, agreed by G-20 ministers in April, has proved challenging to implement, with only 42 of 73 eligible countries expressing interest thus far, saving only US$5.3 billion (S$7.4 billion) in service payments instead of the US$12 billion initially promised.

World Bank officials have singled out China, a G-20 member and the largest creditor for developing countries, for holding back debts owed to its state-owned development projects and state-owned companies.

World Bank president David Malpass also told G-20 officials on Saturday that they needed to "open the door" to talks on reducing the overall debt overhang for the poorest countries.

G-20 officials said they would monitor implementation of the debt freeze and noted efforts to set up a fiscal monitoring framework to strengthen the quality of debt data and improve debt disclosure.

Decisions on extending the freeze would come after the International Monetary Fund and World Bank complete a report on the liquidity needs of countries before the next G-20 finance officials' meeting in October, the communique said.


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A version of this article appeared in the print edition of The Straits Times on July 20, 2020, with the headline G-20 stops short of extending debt freeze for poorest nations. Subscribe