G20 finance ministers meet amid deep recession fears

Meeting comes after G7 nations express support for temporary halt to debt payments


Afp April 15, 2020
Meeting comes after G7 nations express support for temporary halt to debt payments. PHOTO: REUTERS

RIYADH: Saudi Arabia hosts G20 finance ministers and central bankers for virtual talks Wednesday amid warnings of a deep coronavirus-triggered recession and growing calls for debt relief for poor countries including in Africa.

The meeting comes a day after their counterparts from Group of Seven (G7) nations expressed support for a temporary halt to debt payments from the world's poorest countries to help them weather the pandemic – if G20 governments agree.

Ministers and bankers from 20 most advanced economies had pledged in their previous meeting last month to address the debt burden of low-income countries and deliver aid to emerging markets hit hard by the pandemic.

G20 working groups are expected to outline details of the plan in the meeting on Wednesday.

The virtual talks come after the IMF warned on Tuesday that the pandemic is pushing the global economy into its deepest recession in a century cutting world output by 3% this year, and that the crisis could get worse.

The downturn will slash $9 trillion from the world economy, IMF chief economist Gita Gopinath told reporters.

As concerns mount for poorer countries without access to capital markets or adequate health facilities, 18 European and African leaders called for debt relief as well as a stimulus package of at least $100 billion for Africa.

"Only a global victory that fully includes Africa can bring this pandemic to an end," the leaders -- from France and Italy to Ethiopia and Kenya -- wrote in a joint letter published in London's Financial Times on Tuesday.

"We must instate an immediate moratorium on all bilateral and multilateral debt payments, both public and private, until the pandemic has passed."

Calls for debt forgiveness have been growing, including from Pope Francis and French President Emmanuel Macron, as poor countries need to lift spending on health care to confront the pandemic.

The International Monetary Fund (IMF) on Monday approved a six month standstill on debt payments from 25 nations, mostly in Africa.

French Finance Minister Bruno Le Maire has announced that G20 nations and the Paris Club of wealthy nation creditors have agreed to a one-year moratorium on debt payments for poor nations.

He said G20 and Paris Club nations, which include all G7 members, had agreed on the moratorium for 76 nations, including 40 in sub-Saharan Africa.

Le Maire said the agreement so far includes the postponement of $20 billion in payments to bilateral and private creditors.

Another $20 billion in payments to multilateral institutions, mostly to the World Bank, is still awaiting a decision.

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