- Moratorium on bilateral government debt repayments will commence on May 1.
G20, the world’s richest countries have agreed to freeze bilateral government loan repayments for low-income countries until the end of the year.
This is aimed at tackling the health and economic situation as a result of the coronavirus pandemic.
“Tackling the pandemic and its intertwined health, social and economic impacts is our absolute priority,” said the Group after its Extraordinary G20 Leaders’ Summit.
“We are gravely concerned with the serious risks posed to all countries, particularly developing and least developed countries, and notably in Africa and small island states, where health systems and economies may be less able to cope with the challenge, as well as the particular risk faced by refugees and displaced persons. We consider that consolidating Africa’s health defense is a key for the resilience of global health.”
The G20 is made up of 19 countries and the European Union. The 19 countries are Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, the Russian Federation, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the US.
The Group further disclosed that it will be injecting over $5 trillion into the global economy, ‘as part of targeted fiscal policy, economic measures’.
“The magnitude and scope of this response will get the global economy back on its feet and set a strong basis for the protection of jobs and the recovery of growth,” read part of the statement.
The International Monetary Fund Chief Economist Gita Gopinath described the global situation as ‘a crisis like no other’ with estimates that the global economic growth will contract by 3 per cent in 2020.
“This will help with IDA countries’ immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country,” the IMF and the World Bank had said.
Kristalina Georgieva, IMF managing director, welcomed the G20 initiative and said the fund planned to triple its concessional lending.
She said they were “urgently seeking US$18 billion in new loan resources for the Poverty Reduction and Growth Trust, and will also likely need at least US$1.8 billion in subsidy resources.”
World Bank Group President David Malpass welcomed the G20 efforts to allow the IDA countries to suspend repayment of official bilateral credit on May 1st.
“This is a powerful, fast-acting initiative that will bring real benefits to the poor,” he said.