World Bank President David Malpass expects China, the United States and other Group of 20 major economies to extend a freeze in bilateral debt service payments through the end of 2021. Reuters reported citing Malpass on April 5, on the eve of this week's G20 meeting.
“Extending the debt payment freeze through year-end would save even more money that countries could use to combat the COVID-19 pandemic and support their economies,” Malpass said to reporters.
He said G20 members would probably stipulate that such an extension would be the "last or final" one offered. Doing so would incentivize countries to move toward more "permanent solutions to their debt situations," including through the G20 Common Framework for debt treatments. The World Bank and International Monetary Fund said in a joint paper.
It said extending the DSSI debt freeze would give time for the framework process to become fully operational, but it might also delay "difficult-but-necessary restructuring decisions" for some countries.
So far, it said, only three countries - Zambia, Ethiopia and Chad - had requested a debt treatment under the common framework agreed by G20 members and the Paris Club of official bilateral creditors, but 35 countries were now assessed to be "at high risk of debt distress or in debt distress."
The G20 Debt Service Suspension Initiative (DSSI) has already helped countries defer some US$5.7 billion in payments through the end of 2020, with another US$7.3 billion in deferred payments expected through June, according to World Bank data.
As it was reported, leaders of G20 member countries approved the plan of the extension of the freeze of official payments that service the external debts of the world's poorest countries in November last year.
