COVID-19

Business, labor groups urge G20 to extend, expand debt freeze for poorer countries

By Reuters 13 July 2020

epa08325602 A picture released by Xinhua News Agency shows Chinese President Xi Jinping (5-L, back) attending the G20 Extraordinary Virtual Leaders' Summit on COVID-19 via video link in Beijing, capital of China, 26 March 2020 (issued 27 March 2020). Leaders of the Group of 20 vowed to inject five trillion US dollar to minimize the impact of the coronavirus pandemic on the world's economy. EPA-EFE/XINHUA/PANG XINGLEI MANDATORY CREDIT EDITORIAL USE ONLY/NO SALES

WASHINGTON, July 12 (Reuters) - The International Chamber of Commerce, a global trade union and civil society groups urged the Group of 20 major economies to extend and expand a freeze in debt service payments to help not just the poorest, but also middle-income countries, weather the coronavirus pandemic and its economic fallout.

The ICC, International Trade Union Confederation, and Global Citizen, a group pushing to end extreme poverty by 2030, also called on G20 finance ministers, who will meet online on July 18, to take additional steps to boost the participation of private creditors, who have been slow to engage.

In an open letter to be published Monday, the groups said further steps were needed since the global economy was facing an even deeper downturn than projected in April, when the G20 and Paris Club of creditors announced a freeze in debt service payments for the world’s 73 poorest countries through year-end.

Top global finance officials last week said debt restructuring may be needed on a country-by-country basis to help heavily indebted countries hit hard by the outbreak.

So far, 41 countries have applied for relief from debt servicing under the G20 Debt Service Suspension Initiative (DSSI), and the Paris Club has signed agreements with 20 countries ranging from Ivory Coast to Ethiopia and Pakistan.

But many countries not eligible for the moratorium are also at risk of debt distress given the shocks caused by the novel coronavirus outbreak, the group said.

They urged the major economies to boost contributions to enable the International Monetary Fund to continue providing debt service relief to its poorest members through April 2022, and to create similar instruments at regional multilateral development banks.

They also supported a request by debtor nations, which called for the creation of voluntary central credit facilities that would serve as senior debt instruments. These facilities would collect all interest and principal payments, with equal treatment of creditors in the form of proportional interest in the facility. (Reporting by Andrea Shalal; Editing by Aurora Ellis)

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