Eurodad reaction to the G20 suspension of debt payments

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The G20 agreement is significant and will support the immediate Covid-19 response. But the breathing space it provides countries may be short-lived.

Today the G20 announced the suspension of debt payments for the world's poorest countries until the end of 2020.

Mark Perera, Policy and Advocacy Manager at the European Network on Debt and Development (Eurodad), said: "The G20 agreement is significant and will support the immediate Covid-19 response. But the breathing space it provides countries may be short-lived.

"By agreeing only to postpone payments, debt crisis risks are being stored up for later. The upshot is that this costs creditors nothing, and borrowing countries simply have bigger repayments to make down the line.

"Permanent cancellation of debts will be necessary to enable developing countries to deal with the enduring social and economic impacts of the Covid-19 pandemic beyond 2020, particularly in the context of a global recession. The G20 must reconvene as the crisis evolves to consider the cancellation of suspended payments. The international community must also work to agree on a framework to reduce developing country debt burdens in the longer term, and a systematic process for sovereign debt restructuring.

"While welcome efforts have been made to include all creditors in the G20 agreement, it is also vital that the World Bank builds on the IMF and G20 actions, to cancel all 2020 payments it is owed by developing countries. Beyond inviting the private sector to participate, governments must also take steps to ensure freed-up resources from official debt relief isn't used to pay off other debts. This involves exploring legal protections for developing countries from lawsuits for missed payments to private lenders, such as standstills on creditor litigation in key jurisdictions."

 


ENDS

Media contact: Julia Ravenscroft: jravenscroft@eurodad.org/ +32 486356814.

Note to editors:

  • Eurodad (the European Network on Debt and Development) is a network of 50 civil society organisations (CSOs) from 20 European countries.