With the global economy plunged into the worst recession in a century, the Group of 20 nations on Wednesday announced a one-year debt standstill for the world’s poorest nations as they struggle to deal with the coronavirus pandemic.
The G20, which brings together the world’s largest economies, also reiterated the pledge to deploy “all available policy tools” to deal with the health and economic crisis caused by Covid-19.
With over two million cases and fatalities approaching 130,000 worldwide, many of the less developed countries are facing the heaviest burden since they do not have the spending power to deal with treatment and the economic fallout caused by widespread lockdowns of their economies imposed to contain the virus.
The meeting came amid widespread criticism – including from many G20 member countries – of U.S. President Donald Trump’s decision on Tuesday to temporarily halt funding to the World Health Organization over its handling of the COVID-19 disease pandemic, which has now killed 131,000 people.
A source familiar with the agreement said it would cover 12-14 billion U.S. dollars in bilateral debt service payments owed by the 76 International Development Association (IDA) countries, plus Angola, through the end of the year.
The poorest countries will be hardest hit by the pandemic because they have weak health systems and have seen a massive outflow of capital since the crisis began. Many have also been rocked by a sharp drop in commodity prices.
International Monetary Fund Managing Director Kristalina Georgieva welcomed the G20’s “exceptionally rapid” decision to move ahead on debt relief. In a new IMF document, she said debt relief was in the interest of all, “as the global community is as strong as its weakest member in a global pandemic.”