G20 Extends Debt Suspension Initiative for Another Six Months

The G20 nations have announced an extension of the debt suspension initiative for another six months, until June 2021, amid the coronavirus pandemic.

According to international media reports, Saudi Finance Minister Mohammed al Jadaan said after a meeting of G20 finance ministers and central bank governors:

We have agreed to extend the Debt Service Suspension Initiative (DSSI) by six months.

After the meeting, the G20 nations group said in a statement that the extension would be until June 30 next year, but it could be further extended until the end of 2021 when the International Monetary Fund (IMF) and World Bank (WB) meet next spring. “In light of the continued liquidity pressure, while progressively addressing debt vulnerabilities, we agreed to extend the DSSI by six months,” the statement said.

Pakistan is one of the nations that availed it.

It was also agreed in the meeting that the group will examine by the 2021 spring meetings if the economic and financial situation of the poorest countries requires the Debt Service Suspension Initiative (DSSI) to be extended further by another six months.

The G20 nations had pledged in April this year to suspend debt service from the world’s most vulnerable countries through the end of the year because of the sharp economic contraction due to the Covid-19 pandemic. The suspension of more than $14 billion in debt payments was due to expire at the end of the year.

Though the global economy has begun a gradual recovery as the pandemic related lockdowns are lifting and businesses are reopening, the recovery has been sharply uneven. The group said that many of the poorest countries are still spending more on debt payments than on life-saving public services.

The economic pressures on the developing and less developed economies caused several international agencies, including Amnesty International and Transparency International to pressure the G20 nations to cancel existing debt until at least through 2021.

Some countries, like Pakistan, called for an outright cancellation of debt payments. Prime Minister Imran Khan while addressing the UN session last month said that the poorest countries suffered the most from Coronavirus and therefore these countries must be given debt relief by G20 for at least one year.

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