G20 debt relief for poor countries to have more strength to fight COVID-19


G20 debt relief for poor countries to have more strength to fight COVID-19

According to G20 ministers, this will be the last extension, enabling poor countries to mobilize more resources to focus on responding to the challenges of the crisis.

On April 7, the Ministers of Finance and the central bank governors of the group of the world’s leading developed and emerging economies (G20) agreed to postpone interest payment on public debt with other countries. the world’s poorest family, which are in danger of falling behind when the global economy recovers from the COVID-19 pandemic.

In a joint statement after their same-day online meeting, the G20 ministers pledged to continue to push ahead with efforts to assist vulnerable countries.

The notice has a paragraph stating that the parties agree to continue extending the debt rescheduling program for poor countries until December. This program will be applied in April 2020 and the first extension in October 2020, until the end of the year. June 30th.

According to G20 ministers, this will be the final extension, enabling poor countries to mobilize additional resources to focus on responding to the challenges of the crisis and, when appropriate, move on to a more organized approach to solving public debt problems.

In addition, the G20 also supports the plan of the International Monetary Fund (IMF) to increase reserves to help poor countries and commit to reach an agreement on global tax reform by mid-2021.

President of the World Bank (WB) David Malpass welcomed the results of the meeting above. However, he also urged G20 countries to clarify action plans to support the implementation of debt rescheduling programs such as announcing the terms of financial contracts and encouraging private creditors to participate. this program.

Up to now, the debt rescheduling program for poor countries is not considered to be effective. Only 46 (out of 73 eligible countries) have requested and approved to delay repayment of a debt totaling about $ 5.7 billion, official figures show.

On the same day, Mexico and Argentina also called on international creditors to stretch their debt to middle-income countries, where many people are being pushed into extreme poverty by the effects of the COVID-19 pandemic.

In a joint statement, Mexico and Argentina – two members of the G20, said that countries in the middle income group are being forgotten, even though they are the group that accounts for 75% of the world’s population and 62% of these are living. at the poverty level.

Middle-income countries also have access to financial markets but do not enjoy low-interest loans.

Mexico and Argentina called for middle-income countries to be included in the group to benefit from the IMF’s $ 650 billion special assistance scheme.

They also propose to create an international fund to support debt restructuring for middle-income countries, helping to prevent health and financial crises from turning into debt crises in the medium term.

World Bank estimates cite the COVID-19 epidemic that will increase the number of extremely poor people in the world by about 120 million by 2020, mostly in middle-income countries.