G20 Agrees Debt Relief For Global Poor; Will Investors Follow?
The G20 have suspended debt payments for the 77 poorest countries in the world as they wage an economic battle against coronavirus.
An estimated $12 billion was due to be paid between 1 May and the end of 2020. But a meeting of G20 finance ministers on Wednesday (15 April) agreed on a "time-bound suspension of debt service payments" for 77 of the world's poorest countries.
All but 15 of these poor countries currently have confirmed cases of COVID-19, but it is the economic hit of the pandemic that forced finance ministers to act. A slowing of global trade has been economically dramatic. Oil exporters like Nigeria and Angola have suffered falling commodity prices. Meanwhile remittances have dried up and tourism revenue all but ceased.
Private Investors Need To Step Up
Now it is private investors that need to step up, says the G20. "We call on private creditors, working through the Institute of International Finance, to participate in the initiative," they said in a statement from Wednesday's meeting. Over a quarter of all debt, or $3 billion over the next eight months, is owed to private creditors.
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But who are these "private creditors?" Mostly they are specialist hedge funds and banks as well as commodity traders who lend against future exports, says Tim Jones, head of policy at the Jubilee Debt Campaign.
Specifically, the U.K. and U.S. governments need to force these firms to follow their lead, using legal powers if necessary. Virtually all international debt contracts are owed under U.K. or New York law, says Jones. "So those jurisdictions could pass legislation to say that nobody is going to get sued if you suspend debt payments."
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