World Bank President David Malpass Urged The G20 To Discuss Reducing The Debt Of The Poorest Countries
On Saturday, World Bank (WB) President David Malpass called on the G20 countries to discuss the possibility of reducing the debt obligations of the poorest countries to minimize the economic consequences of the coronavirus pandemic. He made this initiative at a video conference of Finance Ministers and Central Bank governors.
According to Malpas, the pandemic led to "the world's largest recession in decades," particularly affecting emerging economies. "I urge the G20 to open the way to consultations on the debt burden itself, as well as effective ways to reduce the net present value of both official bilateral and commercial debt for the poorest countries," the Bank's press service quotes him as saying.
Besides, the head of the World Bank stated the need to extend the moratorium on debt payments by the poorest countries. "I urge you to extend the suspension of debt service initiative until the end of 2021 and commit to providing it with as much scale as possible," he said, noting that transparency on the part of all bilateral creditors, including national banks, is necessary for its implementation. "For example, the full participation of the State Development Bank of China as an official bilateral lender is important for ensuring the operation of the initiative," the WB President added.
"The situation in developing countries is becoming sadder and sadder. Time is short. We must quickly take action on suspending debt servicing, reducing debt, debt resolution mechanisms, and transparency in debt matters, " concluded Malpas.
Earlier on Saturday, managing Director of the International Monetary Fund Kristalina Georgieva, following a video conference, also noted that she believes it is necessary to consider extending the moratorium on debt payments by the poorest countries.
The group of twenty of the world's most developed countries decided in mid-April to suspend debt payments to the poorest countries until the end of 2020, which were facing serious financial difficulties as a result of the pandemic's capital outflows and falling tax revenues. This initiative was supported by 22 countries of the Paris Club of creditors, as well as several major countries, in particular China, India, South Africa, and Saudi Arabia. According to the situation at the end of June, 18 underdeveloped countries were able to use installments - the number of funds saved in this way amounted to $1.3 billion. A total of 32 States submitted requests for a debt moratorium to the Paris club.