From May 1st, poor countries will have their debts suspended. This decision was taken by the G20 on Wednesday (April, 15) and represents a global approach to the consequences of the corona crisis which may be particularly serious for the poorest countries. The Jubilee Debt Campaign group has described the move as a first step, but called for much more. The UK-based charity estimates that the delay will cover $12bn of payments. In all, 77 countries are due to benefit from the agreement.
The German Finance Minister, Olaf Scholz, who announced the agreement, labeled the suspension as an act of international solidarity of historical importance. According to him a delay for both principal repayments and interest payments will be granted until 31 December (2020). The so-called Paris Club which includes 22 major creditor countries will also participate.
A joint Statement by World Bank Group President David Malpass and IMF Managing Director Kristalina Georgieva on Outcome of G20 Finance Ministers’ Meeting is welcoming the decision:
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.
Whilst development organization, Oxfam, also welcomed this decision but it wants even more action to be taken. For example, a number of countries not classified as poor countries, such as Ecuador and Lebanon, will not be able to benefit from this postponement. In addition, Oxfam urged private creditors and multilateral lenders to follow suit in suspending debts repayments.
The G7 – USA, Canada, Japan, Germany, France, Great Britain and Italy – have backed debt relief for low-income countries to help cushion their economies. In a statement, G7 officials also called for more contributions to the IMF’s facilities that support the poorest countries.
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