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G20 backs temporary debt relief for world’s poorest nations
The World Bank last month estimated that the poorest nations owe governments and other official creditors $14 billion in debt service payments this year.
The Group of 20 leading economies agreed to provide temporary debt relief to the world’s poorest countries in an effort to free up resources for those beleaguered nations to fight the coronavirus.
In a communique issued after a teleconference meeting, G-20 finance ministers and central bankers said they agreed to a moratorium on debt payments beginning on May 1 and lasting through the end of the year, and asked private creditors to join them.
“We support a time-bound suspension of debt service payments for the poorest countries that request forbearance,” the group, which collectively accounts for roughly 85% of global output, said.
The G-20’s endorsement of a short-term suspension of debt payments by poor nations is critical because the group contains some of those countries’ biggest governmental creditors, most prominently China, a major lender through its Belt and Road Initiative.
The World Bank last month estimated that the poorest nations owe governments and other official creditors $14 billion in debt service payments this year. They also owe tens of billions of dollars to banks and other private creditors as overseas money has poured into so-called frontier markets in search higher returns in a low interest rate world.
The Institute of International Finance estimates that the world’s poorest nations have some $140 billion in general government debt-service obligations due through the end of the year, including $10 billion in foreign currency. That calculation includes all kinds of debt, to private and public creditors, domestic and foreign, short term and long term.
The institute -- a global trade association that counts the world’s biggest banks and financial institutions as members -- last week said it was willing to join a temporary debt payment suspension for poor countries.
