G20 Finance Ministers today discussed the progress of their Debt Service Suspension Initiative. Ahead of the meeting campaigners have been calling for cancellation of debt payments, including measures to require private lenders and multilateral institutions to take part in any suspension or cancellation. They are also calling for debt payment cancellation to be extended for several years, until an international debt workout process has been established in order to bring debt down to sustainable levels.
The G20 Finance Ministers stated that 42 countries have applied for the bilateral debt suspension. They no longer called on multilateral lenders to suspend debt payments, as they previously did in April. They now “strongly encourage[d] private creditors to participate in the DSSI on comparable terms when requested by eligible countries”, but they have not announced any mechanisms to make private lenders comply. The Finance Ministers said they will consider an extension of the DSSI later in 2020, but did not commit to it.
Reacting to the G20 Finance Ministers statement Sarah-Jayne Clifton, Director of Jubilee Debt Campaign said:
“The coronavirus crisis is worsening across many developing countries, and economic forecasts are dire. We needed rapid and concerted action, but instead the G20 have backtracked. Private and multilateral lenders have refused to suspend debt payments, as requested by the Finance Ministers in April. Today the G20 have allowed those lenders to keep being paid billions of dollars every month, diverting money away from the urgent task of tackling the health and economic crises. It is critical that world leaders step up and ensure more debt cancellation is agreed this year.”
The G20 Debt Service Suspension Initiative allows up to 73 countries to apply to suspend debt payments to other governments from May to December 2020. However, the missed payments then come due between 2022 and 2024. In April the G20 also called on private lenders “to participate in the initiative on comparable terms”, and on multilateral lenders to “explore the options for the suspension of debt service payments over the suspension period”. Neither group has suspended any debt payments.
The World Bank says the suspension of payments to other governments could save up to $11.5 billion in 2020 for the 73 countries, though the G20 have today said only $5.3 billion is being suspended so far. Those same 73 countries are due to pay private and multilateral lenders $19.9 billion over the same time period.