The International Chamber of Commerce (ICC), a global trade union and civil society groups urged the Group of 20 major economies (G20) to extend and expand a freeze in debt service payments to help not just the poorest, but also middle-income countries, weather the coronavirus pandemic and its economic fallout.
The ICC, International Trade Union Confederation and Global Citizen, a group pushing to end extreme poverty by the year 2030, also called on G20 finance ministers, who will meet online on Saturday, to take additional steps to boost the participation of private creditors, who have been slow to engage.
In an open letter to be published on Monday, the groups said further steps were needed since the global economy was facing an even deeper downturn than projected in April, when the G20 and Paris Club of creditors announced a freeze in debt service payments for the world’s 73 poorest countries through year-end.
Top global finance officials said on Wednesday that debt restructuring may be needed to be carried out on a country-by-country basis to help heavily indebted countries hit hard by the outbreak.
So far, 41 countries have applied for relief from debt servicing under the G20 Debt Service Suspension Initiative (DSSI), and the Paris Club has signed agreements with 20 countries ranging from Cote d’Ivoire to Ethiopia and Pakistan. However, many countries not eligible for the moratorium are also at risk of debt distress given the shocks caused by the novel coronavirus outbreak, the group said.
They urged the major economies to boost contributions to enable the International Monetary Fund to continue providing debt service relief to its poorest members through April 2022, and to create similar instruments at regional multilateral development banks.
They also supported a request by debtor nations, which called for the creation of voluntary central credit facilities that would serve as senior debt instruments.
If established, these facilities would collect all interest and principal payments, with equal treatment of creditors in the form of proportional interest in the facilities.
