G20 Saudi presidency to extend debt relief for poor countries by 6 months

Saudi Arabia's Finance Minister Mohammed al-Jadaan speaks during a virtual session of the G20.

G20 nations on Wednesday announced they were extending a debt suspension initiative for the world’s poorest countries by an additional six months, until June 2021.

The 20 most industrialized nations had pledged in April to suspend debt service from the world’s most vulnerable countries through the end of the year as they faced a sharp economic contraction caused by the pandemic.

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“We have agreed to extend the Debt Service Suspension Initiative (DSSI) by six months,” Saudi Finance Minister Mohammed al-Jadaan said after a meeting of G20 finance ministers and central bank governors.

In its final statement after the meeting, the group said the extension would be until June 30 next year, and it could be further extended until the end of 2021 when the IMF and World Bank meet next spring.

“In light of the continued liquidity pressure, while progressively addressing debt vulnerabilities, we agreed to extend the DSSI by six months,” the statement said.

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The group also agreed “to examine by the time of the 2021 spring meetings if the economic and financial situation requires to extend further the DSSI by another 6 months,” the statement added.

The announcement comes after campaigners and the World Bank called for the debt suspension initiative to be extended through the end of 2021.

Some charities such as Oxfam had said it needs to be stretched through 2022.

The DSSI has received 46 applications from eligible countries across the world, most of them from Africa, the G20 said last month.

But the initiative has covered “a meagre 1.66 percent” of debt payments by developing nations this year, according to European Network on Debt and Development (Eurodad).

“Of the 46 beneficiary countries, it has had very limited impact due to the failure of private and multilateral lenders to participate,” Eurodad said in a report that likened the initiative to “draining out the Titanic with a bucket.”

“As a result, only 24 percent of the debt payments due to be made between May and December 2020 by beneficiary countries were actually subject to potential debt suspension.”

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Last Update: Wednesday, 14 October 2020 KSA 20:30 - GMT 17:30
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