G20 Stumbles to Extend Debt Freeze for World’s Poorest

G20 finance officials on Saturday called on all bilateral creditors to fully implement the short-term debt freeze of the world's poorest countries, yet, failed to extend the initiative until next year.

During the meeting, the Group of the 20 supported freezing debt until the end of 2020, given the serious economic implications of the coronavirus, yet, the group's final statement said that the issue would be considered in the second half of 2020, not mentioning anything about the growing calls to fully cancel  the debts of the poorest nations.

The Debt Service Suspension Initiative (DSSI), approved by the G20 in April, has proven difficult to implement, with only 42 out of 73 eligible countries expressing interest so far, saving just $5.3 billion instead of the $12 billion initially promised.

Moreover, the World Bank officials called on China, the G20 largest creditor to developing countries, to suspend the debt owed by state-owned development companies.

"We need to open the door to talks on reducing the total debt accumulated for the poorest countries," World Bank President David Malpass told G20 officials.

The Institute for International Finance said last week that its members had not received any formal debt relief requests from countries eligible for the DSSI, adding to that the failure of the private sector to participate in the initiative.

"All official bilateral creditors must implement this initiative fully and in a transparent manner," officials said, encouraging commercial lenders to provide relief on demand.

The statement concluded that decisions to extend the freeze will come after the International Monetary Fund (IMF) and the World Bank complete a report on the liquidity needs of countries before the next G20 meeting in October.

Meantime, French Finance Minister Bruno Le Maire said that he proposed to G20 counterparts to extend the freeze on debt repayment of 2020 until the end of 2021, and that there are positive signs that an agreement can be reached.

"I think we're going to reach an agreement on this major issue," Le Mer pointed out.

Financial officials from the Group of 20 major economies pledged to continue using "all available policy tools" to combat the coronavirus pandemic and support the global economy, warning that forecasts remain largely uncertain.