China offers $2.1b in debt relief to developing countries

China has extended debt relief worth a total of $2.1 billion to poor countries under the G20 framework, the most among G20 members in terms of deferral amount, Chinese Finance Minister Liu Kun said Friday.

The China International Development Cooperation Agency and the Export-Import Bank of China, as official bilateral creditors, have suspended debt service payments worth $1.35 billion, benefiting 23 countries, Liu said in a statement on the ministry’s website.

The China Development Bank (CDB), as a commercial creditor, has signed agreements with the Debt Service Suspension Initiative for Poorest Countries (DSSI) beneficiaries involving $748 million by the end of September, Liu said.

Liu’s remarks came ahead of the 15th G20 Leaders’ Summit this weekend, which will be the first time in G20’s history that countries have jointly participated in multilateral debt treatments.

China took the lead in calling for and supporting the extension of the DSSI, Liu said.

China’s statement in June plays an important role in leading all parties toward a consensus on the DSSI extension, Liu said.

“China will stay in close communication and coordination with other parties within G20 over the issue of debt vulnerabilities in the poorest countries, and we will continue to participate, in an active manner, in the multilateral debt coordination process,” Liu stressed.

He said the ministry will encourage the CDB and other commercial creditors to participate in the DSSI on comparable terms, while assisting the poorest countries in combining their efforts to address debt challenges with their efforts to restore economic and social development.

Liu said China will provide assistance to developing countries for their efforts in fighting the pandemic and achieving economic and social recovery and development through bilateral and multilateral channels, including $2 billion in international assistance over two years.

“We will prioritize providing in various ways developing countries with a vaccine against COVID-19 when it becomes available,” he said.

Liu called on the World Bank to take part in debt treatments. “If the World Bank takes part in debt treatment by setting up a multilateral debt relief facility, China will consider contributing to the facility to help ease the debt of the poorest countries,” he said.