MercoPress. South Atlantic News Agency

G-20 committed to support vulnerable countries beyond a temporary foreign debt freeze

Bringing the pandemic under control is the key to supporting a global economic recovery, the G-20 leaders said in the draft

The Group of 20 (G-20) nations are determined to continue doing everything possible to contain the Covid-19 pandemic, warning in a draft communiqué that the global economic recovery remains “uneven, highly uncertain, and subject to elevated downside risks”.

Bringing the pandemic under control is the key to supporting a global economic recovery, the G-20 leaders said in the draft. A final joint statement will be released by leaders from the United States, China and other Group of 20 nations after they meet by video conference on Saturday.

In the draft, the leaders noted that the coronavirus crisis had hit the most vulnerable in society hardest, and said some countries may need debt relief beyond a temporary freeze in official debt payments that ends in June 2021.

It said G-20 leaders would revisit whether to extend the moratorium, the Debt Service Suspension Initiative (DSSI), for another six months in the spring of 2021, and endorsed a common framework to deal with debt issues that is also backed by the Paris Club of official creditors.

“We are determined to continue to use all available policy tools as long as required to safeguard people's lives, jobs and incomes, support the global economic recovery and enhance the resilience of the financial system, while safeguarding against downside risks,” the statement said.

The draft underscored the importance of borrowers and creditors to expand transparency on official and private debt, and urged private sector creditors to participate in the G-20 debt relief effort on a comparable basis.

World Bank President David Malpass told G20 finance officials on Friday some countries may need legislative changes to push private sector creditors to get involved. “Given the severity of the crisis, we must move forward now with debt relief processes,” he said.

The draft communiqué also expressed support for a push by the International Monetary Fund to explore additional tools to address countries’ needs as the crisis evolved, and to address the “particular challenges faced by small developing states”.

That could be good news for certain middle-income countries that have been hit hard by the pandemic, a collapse in tourism, and in some cases, lower commodity prices.

The US Treasury Department last week said it was open to extending the G20 common framework to include middle-income countries and small island states, but that view was not shared by all G20 members.