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World | Oct 15, 2020

Poor nations get six-month extension on G-20 debt payment suspension

/ Our Today

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Leaders from the world’s 20-strongest economies all converged at the G-20 2019 summit in Osaka, Japan. (Photo: Euronews.com)

The Group of 20 nations, representing the world’s largest economies, agreed on October 14 to extend the suspension of debt payments by an additional six months to assist the most vulnerable countries in their fight against the coronavirus pandemic.

The suspension of what the G-20 says could provide relief of US$14 billion in debt payments had been due to expire at the end of the year. The decision gives developing nations until the end of next June to focus spending on health care and emergency stimulus programmes rather than debt repayments.

International aid groups have however expressed disappointment that more debt relief isn’t being provided by extending the moratorium on debt payments for a full year or by forgiving part of the debt rather than merely suspending payments.

But G20 officials argued that the relief that is being provided is helping 46 of the 73 countries eligible with efforts underway to expand the help.

Transparency International, Amnesty International and a collective of groups called CIVICUS had written to the G-20 finance ministers ahead of their meeting to warn that the world is facing a crisis unlike any in the last century and that debt suspension is only a first step. Though the global economy has begun a gradual recovery with the reopening of businesses and borders, the recovery has been sharply uneven.

The groups said that many of the poorest countries are still spending more on debt payments than on life-saving public services. They urged the G-20 nations to suspend debt payments at least through 2021. Some countries, like Pakistan, have called for an outright cancellation of debt payments. Oxfam International said it believes that the six-month extension was “the bare minimum the G-20 could do”.

Oxfam and other groups are also calling for private lenders and investment funds to make similar concessions for the poorest countries by suspending their debt repayments.

The G-20, in a final communique, also urged private lenders to join its initiative for debt suspension.

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