The Group of 20 underscored the urgent need to bring the spread of the coronavirus pandemic under control.
They also vowed to “do whatever it takes” to support the global economy and financial stability by endorsing on a “Common Framework” to deal on a case-by-case basis with the rising number of low-income countries facing debt distress.
G20 officials also agreed – as expected – to extend by six months the Debt Service Suspension Initiative (DSSI) that freezes official bilateral debt payments until year-end, and said they would consider another six-month extension in April.
The new debt restructuring framework will be finalized at an extraordinary meeting before a G20 leaders’ summit next month, according to the communique issued after a virtual meeting. An earlier draft had the ministers adopting the framework, but officials were unable to reach agreement on that step this week.
Officials again expressed disappointment about the continued absence of private-sector participation in the moratorium, and urged commercial lenders to join in when asked by countries.
IMF Managing Director Kristalina Georgieva said only three eligible countries had even reached out to private creditors out of fear of marring their ability to borrow in the future.
G20 finance officials said the overall global economic outlook was less negative, with economic activity picking up in some areas. But they said the recovery was “uneven, highly uncertain and subject to elevated downside risks.”
They pledged to continue to address the disproportionate impact the crisis is having on women, young people and other vulnerable segments of society.
World Bank President Malpass told G20 officials it was critical to look beyond the DSSI initiative, which only defers payments but doesn’t reduce them, citing a rising risk of “disorderly defaults.”
Malpass asked G20 leaders to back $25 billion in additional aid for the International Development Association, a division of the World Bank that helps the poorest countries.
G20 finance officials urged the IMF and the Bank, and other multilateral development banks, to keep looking for options to help struggling countries, but failed to back a broader issuance of new Special Drawing Rights, the IMF’s currency, which would be akin to a central bank printing money.
(With agencies’ inputs)