Leaders of the G20, an international forum for the governments and central bank governors from 19 countries and the European Union (EU), on Wednesday, announced they had agreed to suspend debt repayment of the world’s poorest countries beginning May 1, 2020. The announcement was made at a G20 finance ministers’ meeting amid the novel coronavirus pandemic.
In a joint statement, World Bank Group President David Malpass and IMF Managing Director Kristalina Georgieva welcomed “the decision of the G20 to respond to our call to allow the poorest countries of the world that request forbearance to suspend repayment of official bilateral credit on May 1st.”
“This is a powerful, fast-acting initiative that will do much to safeguard the lives and livelihoods of millions of the most vulnerable people. The World Bank Group and IMF will move quickly to respond to the G20’s request for us to support this action by working closely with these countries in ways that make the best use of this vital lifeline. We championed this debt initiative, and we’re committed to taking all possible steps to support the poor,” they said.
Nadia Daar, Head of Oxfam International’s Washington DC Office, said the announcement was “a critical step and will help poor countries free up billions in funds to tackle the coronavirus pandemic.”
“However, the UN estimates that developing countries will need $1 trillion in debt suspension and cancellation to weather the storm ahead. And many countries, such as Lebanon or Ecuador, are left out of this deal when they too need money to save lives and cope with the global economic fallout that the IMF has said is the worst since the 1930s Great Depression,” Daar added.
She said “suspending debt owed to rich countries is only one piece of the puzzle. Huge sums are owed by poor countries to rich private banks and investors in New York and London. They must be pushed to cancel debts by enforcement and not left to voluntary action. Other debt payments are owed to multilateral institutions including the IMF and World Bank, and these too must be cancelled for the year. The IMF can sell some of its huge gold reserves that have risen in value by $20 billion in just the last three months —the windfall profits of that alone would more than cover multilateral debt payments owed this year by the poorest countries.
“While this is an important move by the G20, far more needs to be done to rise to this moment of unprecedented need and save millions of lives. The G20 must not allow the suspended debt payments to accrue into the future, they must cancel all the 2020 debts of all the countries that are being hit by this economic tsunami, and all creditors must follow suit urgently”.
Simon Ateba is Chief White House Correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the U.S. government, the United Nations, the International Monetary Fund, the World Bank and other financial and international institutions in Washington D.C. and New York City.