G20 finance chiefs drop recommendation for extension of debt freeze

WASHINGTON/DUBAI (Reuters) – Group of 20 finance officials on Saturday called on all official bilateral creditors to fully implement a short-term debt freeze for the world’s poorest countries, but failed to extended the initiative until next year.

Sources briefed on the G20 meeting said there was strong support for extending the status quo beyond the end of 2020, given the severity of the economic fallout from the coronavirus pandemic, but the final statement of the group only indicated that the matter would be considered in the second half of the year. of 2020.

He also said nothing about the growing calls for the cancellation – and not just the postponement – of the debts of some of the poorest countries.

The debt service suspension initiative, agreed by G20 ministers in April, has proven difficult to implement, with only 42 of 73 eligible countries having expressed interest so far, saving just 5, $3 billion in service payments instead of the $12 billion originally promised.

World Bank officials have singled out China, a G20 member and the biggest creditor to developing countries, for withholding debts owed to its state-owned development and state corporations.

World Bank President David Malpass also told G20 officials on Saturday that they must “open the door” to talks on reducing the global debt overhang of the poorest countries.

The non-participation of the private sector is also a growing concern. The Institute for International Finance said last week that its members had not received any formal requests for debt relief from DSSI-eligible countries.

The statement did not mention China, but G20 officials said they would closely monitor the implementation of the debt freeze and noted efforts to put in place a fiscal surveillance framework to strengthen the quality of debt data and improve debt disclosure.

“All official bilateral creditors should implement this initiative fully and transparently,” they said.

They also said they “strongly encourage” commercial lenders to provide relief upon request.

Decisions on extending the freeze would come after the International Monetary Fund and World Bank complete a report on countries’ liquidity needs ahead of the next meeting of G20 finance officials in October, the statement said.

The UK-based Jubilee Debt Campaign said failure by the G20 to take faster and more decisive action would cost poor countries billions of dollars every month.

“We needed swift and concerted action, but instead the G20 backtracked,” said Sarah-Jayne Clifton, director of the Jubilee Debt Campaign, one of several groups calling for an extension. freezing the debt and extending it.

More than 200 religious, labor, human rights, environmental and development groups signed a separate letter led by Jubilee USA Network that was sent this week to G20 leaders, the White House and the IMF.

Reporting by Andrea Shalal in Washington, Additional reporting by Leigh Thomas in Paris; edited by Diane Craft and Cynthia Osterman

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