The Group of 20 finance ministers and central bank governors meeting on Wednesday has acceded to the pleas from world leaders to suspend debt servicing for a considerable time in consideration of the challenges poor countries face in the fight against the coronavirus disease.
This debt relief is a response to the plea from a coalition of world leaders who had, last Friday, appealed to the G20 countries for internationally coordinated action that will see this year’s repayments waived, including $44bn due from Africa, while considering future debt relief that will enable poor countries the fiscal space to tackle the health and economic impact of the pandemic.
A communiqué released by the body stated that the G20 had taken “immediate and exceptional measures, domestically and internationally, to address the COVID-19 pandemic and its impact, including by implementing unprecedented fiscal, monetary and financial stability actions ensuring that the International Financial Institutions can provide critical support to developing and low-income countries.”
On providing debt service suspension for the poorest of countries, the group said, “We support a time-bound suspension of debt service payments for the poorest countries that request forbearance. We agreed on a coordinated approach with a common term sheet providing key features for this debt service suspension initiative, which is also agreed by the Paris Club.
“All bilateral official creditors will participate in this initiative, consistent with their national laws and internal procedures. We call on private creditors, working through the Institute of International Finance to participate in this initiative on comparable terms.
“We ask multilateral development banks to further explore the options for the suspension of debt service payments over the suspension period, while maintaining their current rating and low cost of funding. We call on creditors to continue to closely coordinate in the implementation phase of this initiative.”
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