‘Let poor na­tions halt pay­ments to ease cri­sis’

The Guardian - - World Culture - Richard Part­ing­ton Eco­nom­ics correspond­ent

Western gov­ern­ments are be­ing told to sus­pend the col­lec­tion of debt in­ter­est from de­vel­op­ing na­tions to pre­vent a new debt cri­sis as the coro­n­avirus out­break es­ca­lates.

The In­ter­na­tional Mone­tary Fund and the World Bank called on gov­ern­ments that lend to poorer na­tions to agree to re­quests for for­bear­ance from poorer na­tions and to de­lay tak­ing debt pay­ments, al­low­ing time for an as­sess­ment of the cri­sis im­pact.

In a joint state­ment to the G20, the IMF and the World Bank said: “It is im­per­a­tive to pro­vide a global sense of re­lief for de­vel­op­ing coun­tries as well as a strong sig­nal to fi­nan­cial mar­kets.”

Bor­row­ing costs for low-in­come coun­tries have surged in re­cent weeks af­ter in­vestors ditched riskier as­sets.

In past health crises, de­vel­op­ing coun­tries have re­lied heav­ily on in­ter­na­tional aid to fund health­care costs in the face of falling tax rev­enues.

Tim Jones, of the Ju­bilee Debt Cam­paign, said a debt mora­to­rium was ur­gently needed for poorer coun­tries, ad­ding that the IMF and World Bank ought to waive pay­ments to them­selves and urge pri­vate in­vestors to sus­pend tak­ing debt pay­ments.

“It would be out­ra­geous if spec­u­la­tors keep tak­ing pay­ments from poor coun­tries at this time,” he said.

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