G20 countries sympathize with world’s poorest countries, suspend loan services

Finance officials from the Group of 20 major economies have agreed to suspend debt service payments for the world’s poorest countries.

While disclosing this to reporters on Thursday April 16, 2020, Saudi Finance Minister, Mohammed al-Jadaan, stated that the suspension would last through the end of the year.

“The actions to suspend both principal repayments and interest payments will free up more than $20 billion for the countries to spend on improving their health systems and fighting the coronavirus pandemic,” he said.

This was disclosed after a two-hour conference meeting of finance ministers and central bank governors.

The meeting came amid widespread criticism of U.S. President Donald Trump’s decision on Tuesday to temporarily halt funding to the World Health Organization over its handling of the COVID-19 pandemic.

The debt standstill offer is open to the world’s poorest and least-developed countries, as defined by the World Bank and the United Nations, as long as they are current in their debt service payments to the World Bank and the IMF.

The initiative, which was backed by the Paris Club of creditors, is part of globally coordinated efforts to bolster the global economy which is facing the deepest recession since the Great Depression of the 1930s due to the pandemic.

German Finance Minister, Olaf Scholz, said, “The move is an act of international solidarity with a historical dimension.”

“It would let the countries invest in healthcare immediately and without time-consuming case-by-case examination,” he added.

Oxfam International said more work was needed to protect Lebanon, Ecuador and other countries not covered by the deal, and to raise the estimated $1 trillion needed to help countries weather the economic tsunami unleashed by the pandemic.

The charity group and others have called for cancellation – not just suspension – of poor countries’ debts in 2020.

A source familiar with the agreement said it would cover $12 billion to $14 billion in bilateral debt service payments owed by the 76 International Development Association (IDA) countries, plus Angola, through the end of the year.