Wednesday 14 October 2020 12:01 am

Rishi Sunak to urge debt relief for weaker global economies

Chancellor Rishi Sunak will today urge global governments to ease the debt burden on the poorest countries affected by coronavirus as he meets leaders to discuss cooperation.

Sunak will discuss a global action plan for the months ahead with G20 counterparts today. He will then join an annual meeting of the International Monetary Fund (IMF) governors tomorrow.

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The chancellor only took up his post in February, but has had to face the worst downturn in memory.

He has been preoccupied with concerns at home this week. The government has implemented new restrictions in response to rising coronavirus cases, prompting Sunak to beef up his economic support.

But he will today turn his attention to the global economy. He is expected to say that global cooperation is needed to “sow the seeds of recovery”.

In particular, the Treasury said he will push the G20 to extend the “debt service suspension initiative” beyond December this year. The scheme has so far freed up more than $5bn (£3.9bn) for the lowest income countries.

He is expected to say: “No economy has been spared the effects of this crisis – and every recession brings the risk of countries turning inwards. Let’s work together to sow the seeds of recovery.”

Sunak takes to the stage at the IMF

It comes during the annual meeting of the IMF – the international lender of last resort. The Fund yesterday said the outlook for the global economy this year has mildly improved. Yet it said it is still facing a record contraction.

The IMF also argued that countries risk damaging the economic recovery if they withdraw economic support too early.

Although it did not name any names, Sunak has wound down the UK’s flagship wage subsidy scheme much sooner than many European neighbours.  

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Sunak is also set to highlight the importance of considering climate change during the recovery. 

This chimes with the IMF’s concerns. Its chief economist Gita Gopinath said a “public green infrastructure investment push… can significantly increase jobs and accelerate the recovery”.