Calls grow for debt moratorium for poor countries

  • African Finance Ministers call for suspension of all interest payments
  • World Bank Head calls for suspension of all interest and principal payments to other governments

African Finance Ministers have called for a moratorium on all debt interest payments by their governments in response to the coronavirus crisis. They estimate this would save $44 billion in 2020. The Finance Ministers have said a moratorium should cover interest payments to multilateral institutions, other governments, and private loans such as Eurobonds. The Ministers also called for principal payments to be waived for fragile states.

Reacting to the news, Tim Jones, Head of Policy at Jubilee Debt Campaign said:

“African Finance Ministers are right to call for a moratorium on all interest payments. In the face of a huge health and economic crisis, halting debt payments is the fastest way to keep money in African countries. All creditors need to respond quickly by accepting this call for a moratorium. Extending it to principal payments coming due this year would further help in tackling the crisis.”

Head of the World Bank David Malpass has called for a suspension of all debt payments to other governments for the poorest countries. However, he also said countries should implement a set of free market economic policies such as removing regulations and subsidies.

In 2020 the group of poorest countries referred to by David Malpass are due to spend $18.1 billion on debt payments to other governments, $12.4 billion to multilateral institutions and $10.1 billion to external private creditors.

Ecuador’s Congress has also called on the government to suspend debt payments.

Tim Jones continued:

“There should be a moratorium of debt payments by poor countries to other governments, but such a suspension must also apply to the World Bank. David Malpass should act first to suspend the debt payments he has control over, then call on other creditors to join him. Furthermore, it is outrageous that David Malpass is using this crisis to push an extreme economic ideology, at a time when state interventions are needed more than ever to fight this health and economic crisis.”

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