G7 finance heads seen backing extension of debt freeze for poorest nations – sources


2/2
© Reuters. The G7 Finance ministers and central bank governors meeting in Chantilly

2/2

By Andrea Shalal and Leika Kihara

WASHINGTON/TOKYO (Reuters) – G7 finance ministers are expected on Friday to signal their support for extending a debt relief programme aimed at helping the poorest countries weather the coronavirus pandemic, three sources briefed on the issue said.

The ministers of the Group of Seven advanced economies are set to meet by video conference on Friday to discuss global economic developments and the continued impact of coronavirus, which has infected nearly 32 million people worldwide.

Although the International Monetary Fund has argued in favour of extending the debt relief programme’s year-end deadline by a year through 2021, the G7 ministers are likely to back an initial extension of six months, the sources said.

“There is backing for a six-month extension, and there will be discussion of the broader issue of debt restructuring,” one of the sources said.

The G7 finance ministers’ backing for an extension of the debt moratorium through June 2021 would help smooth the way for a decision by the larger Group of 20 group of major economies.

The G20 finance ministers are set to meet on Oct. 14, though the decision would likely be formally adopted by G20 leaders at their summit in November.

The G7 will debate the longer-term debt sustainability of the poorest countries that have been crippled by high debt levels even before the pandemic hit, the sources said.

The discussions reflect a growing realisation among the global community that some of them may need to have their debt restructured, they said.

READ  Coronavirus: Want to sell a home? Make the garden look nice

The sources, all of whom have knowledge of G7 deliberations, spoke on condition of anonymity as they were not authorised to speak publicly. No comment was immediately available from the U.S. Treasury Department, which will host the meeting.

Japanese Finance Minister Taro Aso told reporters on Friday he could not comment on what will be discussed at the G7 meeting.

Under a programme dubbed the Debt Service Suspension Initiative (DSSI), the G20 major economies agreed in April to offer a freeze on debt service payments to the 73 poorest countries through year-end.

But implementation of the debt freeze has been challenging, as COVID-19 has hit the poorest countries particularly hard, triggering calls for an extension of the programme.

World Bank President David Malpass said in a blog post last week that although the G20 debt relief initiative was a good start, deeper and more lasting solutions were needed.

“The current debt payment moratorium is too shallow to provide light at the end of the debt tunnel,” he said, adding that the IMF and the World Bank would look at “additional steps on debt to free up resources” at their annual meetings next month.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

READ  Boeing 'doesn't understand our grief'

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here