07:21 | 16/04/2020 Cooperation
The main international creditors have agreed to suspend the payment of the debt of the poorest countries this year, throwing a financial lifeline to help them cope with the coronavirus crisis, said the French Minister of Finance on Tuesday.
Some 76 countries, including 40 in sub-Saharan Africa, were eligible for suspension of payments totaling $ 20 billion, out of a total of $ 32 billion that countries had to spend on debt service this year.
“We have obtained a debt moratorium on bilateral creditors and private creditors for a total of $ 20 billion,” Bruno Le Maire told reporters.
Government creditors, including not only the Paris Club group of creditors, but also China and other members of the Group of 20 Economic Powers, must suspend $ 12 billion under the agreement, which is to be finalized Wednesday.
Group of Seven (G7) finance officials on Tuesday supported an initiative to provide temporary debt relief to the poorest countries, if backed by China and other G20 countries, and could be agreed with the Paris Club group of creditors.
Meanwhile, a senior German official spoke of a moratorium on official creditors’ debt of up to $ 14 billion, which was the same figure as World Bank President David Malpass last month.
“We are particularly pleased that China has agreed to participate in this moratorium. All of this will free up money for the countries that need it most, “said Le Maire.
China has become a major creditor of developing countries, particularly in Africa, but there is little transparency on the amount they owe. G7 officials said that debtor and creditor countries should work with the International Monetary Fund and the World Bank to improve debt transparency and implement appropriate controls over the use of released resources.
Private creditors have voluntarily agreed to roll over or refinance $ 8 billion in debt, a source from the French finance ministry said.
The UK-based Jubilee Debt Campaign, which runs a campaign of nearly 140 campaign groups and charities for the cancellation of debt payments by the poorest countries, said the deal would give countries more resources to fight the pandemic, while simply suspending payments meant interest would continue to accrue.
“We urgently need the G20 governments to commit to engaging in a UN process to agree on a comprehensive and binding way to write off debts at a sustainable level, ready to be implemented in 2021. Otherwise, today’s debt suspension will be next year’s debt crisis, ”said the group.
The Mayor said that of the $ 32 billion owed this year, the remaining $ 12 billion is owed by multilateral lenders, mainly the World Bank, said The Mayor, urging these lenders to join the debt relief initiative. .
The World Bank and the IMF last month asked public creditors to provide debt relief, and the IMF announced on Monday that it would do so for 25 countries as part of its relief and disaster relief fund. disaster, which has about $ 500 million in resources.