• Thu. Jun 23rd, 2022

G20 suspends debt repayment for poorest countries fighting Covid-19

ByTina R. Wimmer

Mar 11, 2021

Published on:

The world’s richest nations agreed to freeze the debts of poor countries, shortly after nearly 20 European and African leaders issued a joint call for a massive international effort to bolster Africa’s response to the coronavirus. “Only a global victory that fully includes Africa can end this pandemic,” they said.

The finance ministers of G20 Major Economies Groupwhich includes the United States, China, India and others, said they would immediately suspend the obligations of the poorest countries to service the debt they owe.

The statement released after a videoconference on Wednesday dispelled fears that China is blocking such a move, which aims to help poorer countries focus spending on health care and assistance to vulnerable people to contain the outbreak and its fallout.

The joint appeal signed by the leaders of France, Ethiopia, Germany, South Africa and other nations, published in the Financial Timescalled for dramatic measures including an immediate moratorium on all debt payments, public and private, until the pandemic is over.

G20 Videoconference © 路透社图片

While the G20 did not specify how many countries would benefit, France Finance Minister Bruno Le Maire said 76 countries were eligible for the moratoriumincluding about forty in sub-Saharan Africa.

Debt payments worth $20 billion will be suspended, including $8 billion owed to private creditors and $12 billion owed to other countries, he said.

An additional $12 billion in debt payments to multilateral institutions such as the World Bank is also under consideration for a debt freeze. The freeze on debt repayments will last until the end of this year and could be extended.

African officials have joined forces in recent days to seek billions of dollars in financial aid and improve their position in global competition with wealthier countries for badly needed medical equipment. The African Union has appointed four special envoys to mobilize support and created a platform to help the continent’s 54 countries buy medical products in bulk at more accessible prices.

As virus cases among Africa’s 1.3 billion people total more than 16,000, health experts said the continent was weeks behind the United States and Europe in the pandemic and that the increase in cases alarmingly resembles that of Europe.

As the world braces for potential waves of the virus, the joint appeal said no region will be safe if Africa, with largely weak health systems, is left to fend for itself.

The statement said an “unprecedented effort” is needed, the appeal said, addressing the World Bank and IMF directly. “We need to roll out a huge economic stimulus package of at least $100 billion” to give Africa the resources it needs to fight the virus.

Monday, the The IMF has approved $500 million to cancel six months of debt repayments for 25 of the world’s poorest countriesincluding 19 African Member States, so that they can contribute to the fight against the pandemic.

French President Emmanuel Macron during a G20 video conference on the Covid-19 pandemic
French President Emmanuel Macron during a G20 video conference on the Covid-19 pandemic © REUTERS – BENOIT TESSI

On Wednesday, the IMF said sub-Saharan Africa could see growth of minus 1.6% this year, “the lowest level on record”.

Calls for help have multiplied at the highest level. In his Easter message, Pope Francis called for debt cancellation for the world’s poorest countries, saying they are the hardest hit by the pandemic and must not be “abandoned”.

Africa’s debt-to-GDP ratio has risen from 30% in 2012 to 95% today, according to French President Emmanuel Macron in an interview published Wednesday on Radio France Internationale.

“We absolutely must help Africa build its capacity to respond to the health shock, and we must help it respond economically to this crisis,” Macron said.

The new appeal, signed by all of Europe’s G20 leaders, also welcomed a European Union plan for a donors’ conference in May.