G20’s debt relief frustrates WB

WASHINGTON, D. C.: G20 nations announced a six-month extension Wednesday (Thursday in Manila) to a debt suspension initiative for poor countries ravaged by the coronavirus pandemic, falling short of calls by the World Bank and campaigners for a full-year renewal.

The 20 most industrialized nations had pledged in April to suspend debt service from the world's most vulnerable countries through the end of the year as they faced a sharp economic contraction caused by the Covid-19 pandemic.

The initiative will now be extended until the end of June next YEAR, G20 fiNANCE MINISTERS AND central bankers said after a virtual meeting as they also agreed on a "common framework" to individually deal with poor nations distressed by rising debt.

"We have agreed to extend the Debt Service Suspension Initiative by six months," Mohammed al- Jadaan, the finance minister of Saudi Arabia, the current G20 president.

IN ITS fiNAL STATEMENT AFTER THE meeting, the group said the DSSI could be further extended until the end of 2021 when the IMF and World Bank meet next spring "if THE ECONOMIC AND fiNANCIAL SITUAtion requires" the move.

"Given the scale of the Covid-19 CRISIS, THE SIGNIfiCANT DEBT VULNERabilities and deteriorating outlook in many low-income countries, we recognise that debt treatments beyond the DSSI may be required on a case-by-case basis."

The group pledged to publish the common framework ahead of the G20 leaders summit in November. The agreement on the framework marks a leap for China, a major creditor to poor countries THAT OFfiCIALS SAY HAS RESISTED ATtempts to write off debts.

"The G20 took an important step today, but it didn't go far enough," said Najat VallaudBelkacem, the France director of the ONE campaign.

"They could have extended the debt service standstill until the end of 2021, helping the world's poorest countries combat this global pandemic. They simply chose not to."

Campaigners warn of a looming debt crisis across poverty-wracked developing nations. The World Bank on Monday said the debt of the world's 73 poorest countries grew 9.5 percent last year to a record $744 billion.

The countries' debt burden owed to government creditors, most of whom are G20 states, reached $178 billion last year, and China is owed more 63 percent of that.

"The tendency in past debt crises (was) for countries in debt distress to go through a series of ineffective debt reschedulings that leaves them weaker," said World Bank president David Malpass.

"Creditors may eventually allow them to get to a debt reduction process, but at a tremendous cost to the poor. We need to work better and faster this time."