G-7 discusses extending debt relief for low-income countries into 2021

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G-7 finance ministers on Monday discussed extending a freeze on debt-service payments for low-income countries into 2021, a U.S. Treasury spokesperson said.


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In a readout, the U.S. official said the G-7 discussed the G-20 debt-relief plan and “additional options going forward for low-income countries, including an extension of debt suspension into 2021.”

The freeze for the 73 poorest nations is set to expire at the end of the year. The program, called the G-20 Debt Service Suspension Initiative, was designed to make sure these countries had money to fight the coronavirus pandemic.

According to the U.S. official, the G-7 called on “all official bilateral creditors” to fully implement the G-20 debt plan.

Yun Sun, an expert on China and a nonresident fellow at the Brookings Institution, said this language appeared to be a veiled reference to China.

“I’d say it was an unnamed poke at China, or at minimum, China will feel it as a veiled poke,” Yun Sun said in an email.

China is the largest official creditor to Africa, holding 20% of African government debt — and many countries that qualify for the debt relief are located in Africa, according to the Jubilee Debt Campaign. Although China is a member of the G-20, there have been questions about whether it has been participating fully in the debt-relief effort.

Oxfam said in July that 41 countries have applied for the debt relief, potentially saving them $9 billion in 2020.

The nonprofit group criticized the G-20’s temporary suspension of debt as “woefully inadequate” to stave off the worst effects of the pandemic . Oxfam noted the measure fails to mandate any action from private creditors or multilateral development banks such as the World Bank.

The G-7 officials also discussed supporting the manufacturing and distribution of vaccines and treatments for COVID-19, particularly related to low-income countries.

The finance ministers also discussed support for Lebanon. The Lebanese economy was already suffering from a crisis before a massive explosion in Beirut destroyed large parts of the capital, including its sea port, on Aug. 4.

The officials also noted improvements in economic conditions across G-7 economies.

U.S. Treasury Secretary Steven Mnuchin hosted the G-7 meeting via teleconference earlier Monday.

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