The G20 group of the world’s biggest economies has agreed to suspend the debt repayment plans of the world’s poorest countries to free up funding so they can tackle the coronavirus pandemic.
The decision, which will last from 1 May until the end of this year, will allow 77 of the world’s poorest nations to spend $20bn more on their healthcare systems, Saudi Arabia’s finance minister said.
The scheme, which was agreed by finance ministers from G20 countries today, is one of a number of efforts being made to bolster the world economy as it slips into recession.
German finance minister Olaf Scholz called the move “an act of international solidarity with a historical dimension” which would let countries turn funding to tackling the pandemic immediately.
International Monetary Fund director Kristalina Georgieva and World Bank Group President David Malpass hailed the deal in a joint statement:
“This is a powerful, fast-acting initiative that will do much to safeguard the lives and livelihoods of millions of the most vulnerable people”.
The G20 also called on private creditors to join in with the initiative on comparable terms.
An official from the French finance ministry revealed that such players had already agreed to refinance around $8bn in debt, on top of suspending $12bn in repayments.
The Institute of International Finance, which represents 450 banks, hedge funds and other global financial firms, said it would recommend that private sector creditors voluntarily grant debt relief to the poorest countries, if they requested it.