October 14, 2020: G20 finance ministers and central bankers are set to hold talks Wednesday aimed at spurring global recovery from a coronavirus-triggered recession while considering a proposal to extend debt relief for crisis-hit poor countries.
The virtual talks, hosted by current G20 president Saudi Arabia, come a day after the International Monetary Fund warned that global GDP would contract 4.4 percent in 2020 and the damage inflicted by the pandemic would be felt for years.
The meeting will “discuss updates to the G20 Action Plan — supporting the global economy through the COVID-19 pandemic,” G20 organisers said in a statement.
The group will also discuss “the progress made on the G20 Debt Service Suspension Initiative (DSSI) and its proposed extension into 2021,” the statement added.
The 20 most industrialized nations had pledged in April to suspend debt service from the world’s poorest countries through the end of the year as they faced a sharp economic contraction caused by the pandemic.
The World Bank and campaigners have called for the debt suspension initiative to be extended through the end of 2021, while charities such as Oxfam say it needs to be stretched through 2022.
But World Bank President David Malpass on Monday warned G20 countries may only approve a six-month debt relief extension because “not all of the creditors are participating fully” to help poor nations weather the health crisis.
“I think there will be compromise language (on) maybe a six-month extension that can be renewed depending on debt sustainability,” Malpass said.
The DSSI has received 46 applications from eligible countries across the world, most of them from Africa, the G20 said last month.
But global campaigners have criticized the group for doing little to help poor countries stave off the knock-on effects of the pandemic.
– ‘Uncertain’ recovery –
The talks, chaired by Saudi Finance Minister Mohammed al-Jadaan and central bank governor Ahmed al-Kholifey, come as the surging health crisis continues to batter the global economy and triggers unemployment on a massive scale.
Huge injections of government aid have kept economies from plunging further in 2020, but the continued presence of Covid-19 means the outlook is highly uncertain, the IMF said in its latest World Economic Outlook on Tuesday.
The recession has been less severe than expected but still deep and “the ascent out of this calamity is likely to be long, uneven, and highly uncertain,” IMF chief economist Gita Gopinath said.
Campaigners warn of a looming debt crisis across poverty-wracked developing nations.
The World Bank on Monday said the debt of the world’s 73 poorest countries grew 9.5 percent last year to a record $744 billion, which shows “an urgent need for creditors and borrowers alike to collaborate to stave off the growing risk of sovereign-debt crises”.
The countries’ debt burden owed to government creditors, most of whom are G20 states, reached $178 billion last year, it added.
Last month, G7 finance ministers said they “remain committed” to the DSSI while again calling for private creditors to implement the plan.
But Malpass has decried a lack of participation by private-sector creditors while adding that wealthier countries are not doing their full share.