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The finance ministers and governors of the G20 nations decided to suspend debt repayment to the International Monetary Fund and the World Bank by the poorest countries in an effort to ensure financial stability to them reeling under the impact of Covid-19 pandemic
This initiative will be applicable to bilateral official creditors provided it is consistent with their (lender countries) national laws and internal procedures. G-20 also called on private creditors, working through the Institute of International Finance, to participate in the initiative on comparable terms.
It also exhorted multilateral development banks to further explore the options for the suspension of debt service payments over the suspension period.
The finance ministers and governors of the G20 nations decided to suspend debt repayment to the International Monetary Fund and the World Bank by the poorest countries in an effort to ensure financial stability to them reeling under the impact of Covid-19 pandemic. This would also provide them an opportunity to extend fiscal stimulus to revive those economies.
This was the second virtual meeting to discuss the fallout of the Covid-19, the first being held a few weeks ago. G20 members will suspend the debt including both principal and interest. This facility will be available to all least developed countries as defined by the United Nations for a period of three years with one year additional grace period, which will start from 1 May and will last until December 2020.
This initiative will be applicable to bilateral official creditors provided it is consistent with their (lender countries) national laws and internal procedures. G-20 also called on private creditors, working through the Institute of International Finance, to participate in the initiative on comparable terms. It also exhorted multilateral development banks to further explore the options for the suspension of debt service payments over the suspension period.
The beneficiary countries have to commit the financial accommodation to increase social, health or economic spending in response to the coronavirus crisis. In the meantime, they are barred from contracting new non-concessional debt during the debt suspension period.
This initiative, www.trendsnafrica.com feels would help a large number of African countries, which come under the definition of least developed countries as per the UN definition.
