G-20 agrees on plans for more debt relief

DUBAI, United Arab Emirates — The Group of 20 nations, representing the world’s biggest economies, announced Friday that lowincome countries hardest hit by the fallout of the coronavirus pandemic could potentially get an extension on their debt payments beyond mid-2021, and in the most severe cases, a debt write-off.

The G-20 statement, released after a virtual gathering of the group’s finance ministers and central bank governors, declared that the countries had agreed on a “common framework” for “timely and orderly” debt restructuring that aims to treat creditors equally and negotiate debt on a case-bycase basis.

But it did not specify which creditors would agree to possible debt cancellation. China, for instance, has repeatedly objected to portions of the debt relief plans. The country, considered to be Africa’s largest creditor, is reluctant to give up the billions it is owed from its politically strategic projects across the developing world as its own economy slows.

Themeeting comes a month after the G-20 agreed to suspend $14 billion in debt payments for an additional six months to support 73 of the world’s neediest countries. Developingnations nowhave until June 2021 to spend on health care and emergency stimulus programs without fretting about debt repayments to foreign creditors.

Although the pause on debt-service payments was welcomed as a reprieve, experts have pointed to the constraints of a scheme that leaves out private lenders like investment firms, banks and bondholders. Without buy-in from the private sector, economists say that poor countries’ emergency funds may just land in other lenders’ pockets, regardless of the G-20’s concessions.

Mohammed al-Jadaan, the finance minister for Saudi Arabia, this year’s chair of theG-20, hailed the framework as “an unprecedented agreement and a major breakthrough in international debt agenda.”

The group also announced Friday that it would reconvene next spring to see “if the economic and financial situation requires” an extension of the debt suspension by another six months. A repayment timetable of 5-6 years may be offered to eligible countries that make requests to individual creditors.