Global 'Jubilee' Looms As G20 Finalizes Debt Relief Program
Global 'Jubilee' Looms As G20 Finalizes Debt Relief Program For World's Poorest Countries
By Tyler Durden Sun, 04/12/2020 - 20:55
Hours after Pope Francis on Easter Sunday morning said the debt burden on the most impoverished countries should be forgiven (aka debt jubilee), the Financial Times is now reporting that the G20 group is nearing a critical "action plan" to freeze debt servicing payments for poor countries to stave off an emerging-market meltdown.
The new relief program could be finalized on April 15 on a videoconference of finance ministers and central bank governors. The plan would "freeze on sovereign debt repayments for six or nine months, or possibly through to 2021," the official told the Times.
The official said developed countries and multilateral institutions would use this period to write up "very clear criteria, country-by-country of what exactly is going to happen. Is it debt relief totally? Is it just a deferment, a rescheduling?"
"For debt relief to happen, it would take time for it to be co-ordinated," the official said.
"But what is immediately needed is to give these people space so they don't need to worry about the cash flow and debt servicing going to other countries, and they can use that money for their immediate needs," the official said, who did not want to be named due to the sensitivity of the discussions.
Last week, the British-based Jubilee Debt Campaign called for a worldwide debt jubilee to avoid some of the world's poorest countries from collapsing into chaos amid the COVID-19 crisis.
Sarah-Jayne Clifton, director of the Jubilee Debt Campaign, said: "The suspension on debt payments called for by the IMF and World Bank saves money now, but kicks the can down the road and avoids actually dealing with the problem of spiraling debts."
Clifton is urging for the immediate cancellation of 69 of the world's poorest countries' debt payments this year, which would free up at least $25 billion for the countries in 2020, and up to $50 billion if the jubilee was extended to the end of 2021.
"This is the fastest way to keep money in countries to use in responding to Covid-19, and to ensure public money is not wasted bailing out the profits of rich private speculators," added Clifton.
Much of the debt crisis concern is situated around the poorest countries that line China's Belt and Road Initiative.
The official said there is "very clear recognition that a global co-ordinated approach is a must" to avoid an emerging market debt crisis.
"There must be a level playing field so that all creditors agree to the same key parameters," she said. "But with that in place there is always a need for bilateral discussions between each creditor and debtor nation, and China could work within that framework. They are very much involved and I think they will be part of an agreement."
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