G20 extends helping hand to most vulnerable nations amid pandemic
The G20 finance ministers and central bank governors pledged to do whatever it takes to support the global economic recovery
Financial leaders from the group of 20 major economies agreed on Wednesday to extend the G20 Debt Service Suspension Initiative (DSSI) by an additional six months to support the most vulnerable countries amid the Covid-19 pandemic. The G20 Finance Ministers and Central bank governors pledged to do whatever it takes to support the global economic recovery.
“#G20 Finance Ministers and Central Bank Governors just agreed to extend the G20 Debt Service Suspension Initiative by an additional 6 months to support the most vulnerable countries in their fight against the #COVID19 pandemic,” the official handle of G20 Saudi Arabia tweeted.
#G20 Finance Ministers and Central Bank Governors just agreed to extend the G20 Debt Service Suspension Initiative by an additional 6 months to support the most vulnerable countries in their fight against the #COVID19 pandemic. #G20SaudiArabia— G20 Saudi Arabia (@g20org) October 14, 2020
The financial leaders decided to extend the DSS1 to June 30, 2021, for the eligible countries and said that they will further extend the DSSI by another six months if it is required. The repayment period will be 5 years with a one-year grace period.
Speaking at the virtual meeting, Finance Minister Nirmala Sitharaman said that a more structural treatment of debt is required in a longer term. She emphasised that this process should primarily be guided by the objective of helping such countries overcome the fiscal stress caused by the pandemic, a statement issued by the Finance Ministry said.
According to the communique issued after the virtual meeting, G20 finance ministers and central bank governors also agreed in principle for the first time on a “Common Framework” to deal on a case-by-case basis with the rising number of low-income countries facing debt distress. The Paris Club of official creditors also backs the framework.
The new debt restructuring framework will be finalized at an extraordinary meeting before a G20 leaders’ summit in November. An earlier draft had the ministers adopting the framework, but officials were unable to reach an agreement on that step this week.
Reiterating that G20 remains committed to doing whatever it takes to support the global economy and financial recovery, the financial leaders said that they will continue to address the disproportionate economic and social impact of the crisis on women, young people, and the most vulnerable sections of society amid Covid-19 pandemic.
About the global economic recovery, G20 finance officials said the overall global economic outlook was less negative, with economic activity picking up in some areas. But they said the recovery was “uneven, highly uncertain and subject to elevated downside risks.”
They pledged to continue to address the disproportionate impact the crisis is having on women, young people, and other vulnerable segments of society.
Co-chaired by Saudi Minister of Finance Mohammed Aljadaan, and the governor of the Saudi Arabian Monetary Authority Ahmed Alkholifey, the meeting was held virtually this year keeping in mind the current COVID-19 situation.