In response to yesterday’s news that G20 finance ministers agreed to put bilateral debt payments of the poorest countries on hold so they can fight the Covid-19 pandemic, save lives and help support those who lose their jobs, the international development NGO Christian Aid has warned that without full debt cancellation, the G20 announcement only provides a brief respite.
Christian Aid’s Principal Advisor on Private Sector Matti Kohonen said: “The G20 risks kicking the can down the road. Debt payments for 2020 should be cancelled outright, rather than added to the debt burden of the poorest countries. At the moment, countries are still expected to pay back these debts with interest between 2022 and 2024.
“The economic impacts will outlast the pandemic. Creditor countries should be working now on a longer-term debt relief package, which includes suspension of all payments at least until the end of 2021. Without this, the poorest countries won’t have a realistic exit route from the economic crisis.
“Now is the moment for the IMF to use their gold reserves, estimated to be worth $160 billion, to support this approach. Gold prices are at a historical high. It would be unconscionable for the IMF to sit on them in the face of the greatest economic crisis since the 1930s.
“It’s positive that the G20 called on commercial creditors to also suspend debt payments for the same period, but with no mechanism in sight to actually implement this. The UK along with New York is a leading jurisdiction for debt contracts and the UK should swiftly introduce legislation to prevent any lender suing poor countries that suspend debt payments, until the crisis is over.”
He added: “The lives of millions of people in developing countries hangs in the balance. Weak health systems risk being overwhelmed, livelihoods are being destroyed, and government revenues are collapsing. This is a time to cancel debt payments and save lives.”
“It’s time to rethink how we do things. The interests of creditors cannot be put before the lives of people in the poorest countries. We call for concerted action by governments, multilateral bodies and private sector creditors to cancel debt payments outright, and in the longer term to bring together an international crisis conference to tackle the economic impact of this crisis, and establish new rules for debt, that enable a recovery from the crisis to be properly funded.”
