G20 ready to reduce, forgive debt of poor countries

PARIS, France (AFP) — G20 nations are expected to agree Friday on a framework that should unlock restructuring of official debt of dozens of poor countries ravaged by the coronavirus pandemic, according to a French finance ministry source.

G20 nations last month agreed to a six-month extension to a debt suspension initiative, but there have been growing calls to go further as spending needs to fight the pandemic, and the economic crisis it has triggered means many nations can no longer service their debts.

The wealthy countries’ club will agree Friday to study on case-by-case basis requests to reschedule, reduce and even forgive debts, the French finance ministry source said.

“The framework that will be approved Friday by G20 finance ministers fixes the common principles for the 20 members of the Paris Club as well as five member countries of the G20: China, India, Saudi Arabia, South Africa and Turkey,” said the source.

Seventy-three countries are eligible to have their debt restructured, including 38 in sub-Saharan Africa.

“It is a historic deal because it is the first time that countries have agreed on a common framework” beyond the Paris Club, where China is not a member although Beijing “is by far the top lender” in the world, added the source.

The Paris Club unites industrial countries which had previously been the main countries to provide loans to developing nations.

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