Four anti-poverty international organizations called on G-20 finance ministers to cancel debts in poor nations on Thursday, saying that will free up money for public health spending needed to fight the COVID-19 pandemic.
Oxfam International, Christian Aid, Global Justice Now and the Jubilee Debt Campaign said developing countries need substantial debt relief to deal with the pandemic-fueled health and economic crises.
They noted that the Group of 20 major economies, United Nations and International Monetary Fund previously acknowledged debt relief as a worthy goal. In April, G-20 leaders agreed to suspend an estimated $12 billion in debt payments for more than 70 poor and mostly African nations this year.
“The G-20’s temporary suspension of debt in April, while welcome then, is woefully inadequate now to stave off the worst economic effects of the pandemic,” the organizations said in a statement. “Crucially, it fails to mandate any action from private creditors or multilateral development banks such as the World Bank.”
Their statement came just days ahead of a virtual meeting of G-20 finance ministers and central bank governors scheduled for this coming Saturday. It will be chaired by Saudi Arabia, which holds the G-20’s annual revolving presidency.
The meeting was called to review progress on “enhancing access to opportunities for all, financial resilience and development, infrastructure investment, addressing tax challenges arising from the digitalization of the economy, and financial sector issues,” the Saudi government said in a statement.
World's poorest countries are paying $2.8 billion every month in debt repayments. The #G20 must step up efforts to avert looming global debt crisis: https://t.co/Waw6oYd5fI #COVID19 pic.twitter.com/73cKk6wKNa
— Oxfam International (@Oxfam) July 16, 2020
Extending debt relief
Under the so-called Debt Service Suspension Initiative, or DSSI, 73 countries are eligible and 41 have applied, potentially saving them up to $9 billion this year.
But the four organizations said their research shows all 73 countries will still pay up to $33.7 billion in debt repayments this year, or $2.8 billion a month, which is double the amount that Malawi, Uganda and Zambia collectively spend on health each year.
The debt repayments stem from $13.8 billion owed to multilateral institutions, $11.6 billion to private creditors and $3.77 billion to the World Bank. As a result, the four organization are calling on G-20 finance ministers to make DSSI legally binding through 2022 and extend it to middle-income countries.
“An eight-month freeze on bilateral debt alone does not come close to freeing up enough cash or time for the world’s poorest countries to cope with the pandemic and its effects,” Oxfam International Interim Executive Director Chema Vera said.
“Money saved on bilateral debt should not have to go straight to other creditors like rich private banks and bondholders,” said Vera, a Spaniard with a background in management and engineering. “Countries need this relief for free health care for all and cash grants to poor households. The World Bank needs to step up and provide debt relief, at the very least through ensuring an initial debt standstill.”