BRUSSELS / WASHINGTON, Oct 13 (Reuters) – The major G20 economies will agree to extend the debt service freeze for poor countries at least six months after the end of 2020 due to the coronavirus, and adopt a common approach for the long term. deadline, according to a draft statement accessed by Reuters on Tuesday.
In the draft, the finance ministers and central bankers of the Group of 20 countries said they would carry out a review in April on whether a new six-month extension was necessary.
In the draft, which was prepared for a virtual meeting of G20 finance ministers and central bank governors on Wednesday, they agreed to adopt a coordinated approach and a “common framework” for debt actions to be taken beyond the Initiative. Debt Service Suspension (DSSI) of the group that was approved in April.
The COVID-19 pandemic has hit developing countries and emerging market economies particularly hard, exacerbating already high debt levels and bringing a growing number of countries to the brink of default.
The project said that the DSSI initiative, which offered to suspend payments on the official bilateral debt of the poorest countries, had facilitated a significant increase in spending to combat the pandemic and its economic consequences.
Under the initiative, more than 40 of the 73 eligible countries have deferred some $ 5 billion in debt payments, but that figure is far less than the $ 12 billion that would have been generated if they had participated more countries.
Experts say a big problem has been the lack of private sector involvement and the fact that G20 member China has not fully engaged with all of its state institutions, including the China Development Bank.
The draft communiqué addressed both issues and urged all official bilateral creditors to “implement this initiative fully and transparently.” Private creditors were strongly encouraged to participate when requested.
World Bank President David Malpass told a panel at the annual meetings of the International Monetary Fund and the World Bank that he was pledging to provide sufficient fiscal space to countries facing debt problems through grants.
He said it was also critical to speed up the debt restructurings that would be needed, noting that the process had taken about seven years in the past.
(Report by Jan Strupzewski in Brussels and David Lawder and Andrea Shalal in Washington; Edited in Spanish by Javier López de Lérida)