G20 countries agreed to suspend poor countries’ debt payments for a year, freeing up $20 billion for them to spend on treating the coronavirus pandemic and shore up their economies.
Banks and other private creditors, along with multinational development banks, should voluntarily do the same, the finance chiefs from the economic powers said Wednesday after a teleconference on containing the economic damage from COVID-19.
“The debt suspension has started immediately,” Saudi Finance Minister Mohammed Al-Jadaan, chair of the meeting, said in a videostreamed news conference from Riyadh. The move “gives the poor countries breathing space” to boost medical spending and take other action to protect lives or jobs.
But it only applies to debt servicing payments to governments and doesn’t forgive those debts.
The finance chiefs also endorsed the International Monetary Fund’s $1 trillion lending program, along with a $200 billion program from the Word Bank and other development lenders. They also called on the IMF to consider “additional tools.” But on proposals to increase Special Drawing Rights for countries in need, the group’s statement said, “there was no consensus on the issue.”
Global talks on taxing digital companies are continuing, but on the back burner as officials “are focused on dealing with the immediate crisis management,” Al-Jadaan said.
“It is more relevant today than before as countries start to recover from the crisis and start to think about means to ensure they repay their debts” and support government spending, he added. “Fixing this is essential.”