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G20 to extend debt relief for poor countries by 6 months

The G20 Debt Service Suspension Initiative (DSSI), which allows poor countries to suspend payments on official bilateral debt owed to G20 creditors until the end of the year, was extended by a further six months.

The announcement came following a virtual meeting of Finance ministers and central bank governors from the G20 major economies on Wednesday. “G20 finance ministers and central bank governors have just agreed to extend the G20 suspension initiative by another six months to support the most vulnerable countries in their fight against the COVID- 19 pandemic,” the group announced on Twitter. Supporters of the DSSI had sought a year-long extension but World Bank President David Malpass warned on Monday that certain G20 creditor countries were hesitant to extend another year of debt service relief to the world’s poorest countries.

“I think there will be compromise language (on) maybe a six-month extension that can be renewed depending on debt sustainability,” Malpass said. The initiative was launched in May and Malpass said that it had allowed the release of $5 billion to strengthen coronavirus responses so far. Malpass and IMF Managing Director, Kristalina Georgieva, had urged for additional debt relief for lowand middle-income countries to avert what was termed as a “lost decade” in the wake of the pandemic’s disruptive effects on global economies. Malpass said both institutions would present a joint action plan to cut the debt stock for poor countries with unsustainable debts. The official bilateral debt of the poorest countries to G20 countries hit $178 billion in 2019.

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