G20 set to extend ‘last or final’ debt payment freeze until end of 2021 to aid coronavirus recovery, World Bank chief says
- The G20 Debt Service Suspension Initiative (DSSI) has already helped countries defer some US$5.7 billion in payments until the end of 2020, with another US$7.3 billion in deferred payments expected until June
- Extending the debt payment freeze until the end of the year would save even more money that countries could use to combat the coronavirus pandemic and support their economies, World Bank president David Malpass said
World Bank president David Malpass said on Monday he expects China, the United States and other Group of 20 (G20) major economies to extend a freeze in bilateral debt service payments until the end of 2021 when they meet this week.
Extending the debt payment freeze until the end of the year would save even more money that countries could use to combat the coronavirus pandemic and support their economies, Malpass told reporters, but gave no specific estimate.
He said G20 members would probably stipulate that such an extension would be the “last or final” one offered.
Doing so would incentivise countries to move toward more “permanent solutions to their debt situations,” including through the G20 Common Framework for debt treatments, the World Bank and International Monetary Fund (IMF) said in a joint paper prepared for their spring meetings this week.
While the temporary freeze in debt payments would help, Malpass said “actual debt relief” would be needed in the longer term to allow the poorest countries to reduce their unsustainable debt burdens to a more moderate level.
The IMF-World Bank paper said low-income countries were still building their understanding of and confidence in the Common Framework, which could limit its initial utilisation.