- October 15, 2020
- Posted by: Administrator
- Category: Business News
World’s economic leaders will also adopt a common approach to longer-term debt actions
The G20 countries have agreed to extend debt suspensions for poor countries which were particularly hard hit by the coronavirus pandemic for a further six months.
The debt freeze could be extended beyond June 2021, until the end of next year. This will be discussed again at a special meeting of G20 finance leaders in November, as part of the main summit.
Saudi Arabia hosts G20 talks on coronavirus recovery, debt relief
Meeting comes as IMF warns global GDP will contract 4.4% in 2020 due to impact of the Covid pandemic
These virtual talks, hosted by current G20 president Saudi Arabia, come after the International Monetary Fund (IMF) warned that global GDP would contract 4.4 percent in 2020 and the damage inflicted by the pandemic would be felt for years.
During the virtual meeting organised by the Saudi presidency in Riyadh, Saudi Finance Minister Mohammed Al Jadaan described the initiative as a “major breakthrough in the global debt agenda” but called for more participation from the private sector.
“It is about time private investors also participated in the debt suspension. I encourage them to do so,” Al Jadaan urged.
Saudi Finance Minister Mohammed Al Jadaan described the initiative as a “major breakthrough in the global debt agenda”
The Debt Service Suspension Initiative, which was introduced in April 2002, has seen more than 40 of 73 eligible countries defer some $5 billion in debt payments, but that is far less than the $12bn that would have been generated if more countries had participated.
The World Bank on Monday said the debt of the world’s 73 poorest countries grew 9.5 percent last year to a record $744bn, which shows “an urgent need for creditors and borrowers alike to collaborate to stave off the growing risk of sovereign-debt crises”. The countries’ debt burden owed to government creditors, most of whom are G20 states, reached $178bn last year, it added.
Financial leaders of G20 countries also reached an agreement on a common framework and a coordinated approach for debt action and the handling of insolvency issues to be taken beyond the group’s (DSSI) which was approved in April 2020.
