G7 says debt relief initiative for poorest nations can be extended beyond 2020

The finance ministers of the wealthy G7 nations have said a debt relief initiative for the world's poorest countries could be extended beyond the end of the year to help deal with the fallout from the coronavirus pandemic.

Their joint statement came amid warnings that low-income and emerging market economies will need more than the International Monetary Fund's initial estimate of USD 2.5 trillion to deal with the crisis.

The Group of Seven (G7) includes Canada, France, Germany, Italy, Japan, the UK and the US.

"We continue to work together to advance the international economic response to the COVID-19 pandemic, with a focus on the poorest and most vulnerable countries," the ministers of the world's most advanced economies said.

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"COVID-19 has exacerbated existing debt vulnerabilities in many low-income countries, highlighting the importance of debt sustainability and transparency to long-term financing for development," they said.

These nations welcomed efforts of the international financial institutions (IFIs) to amplify their support for the most vulnerable countries.

"In this context, we are committed to implementing the Debt Service Suspension Initiative (DSSI) agreed by the G20 and the Paris Club, by suspending official bilateral debt payments for the poorest countries to year-end 2020 and possibly longer, providing those countries fiscal space to fund social, health, and other measures to respond to the pandemic," they said.

"In line with the G20 and Paris Club DSSI agreements, we will implement the DSSI across our export credit agencies and other public lending agencies, and call on all official creditors to do so, too," they said.

The G-7 finance ministers said they strongly support the commitment by DSSI beneficiary countries to strengthen debt reporting, which facilitates better-informed investment decisions, enhances public accountability, and supports long-term sustainable development.

"We welcome that the International Monetary Fund (IMF) and the World Bank Group will monitor creditor participation, public debt disclosure, and use of additional fiscal space, and we look forward to public reporting of these results.

"Beyond the DSSI, the IFIs have an important role to play in helping borrowing countries improve practices to promote debt transparency and sustainability, as outlined in the framework of the IMF and World Bank’s multipronged approach for addressing emerging debt vulnerabilities," they said

They called on the IFIs, borrowers, and creditors to work together on strengthening public reporting of debt data used in debt sustainability analyses, including a breakout by the external creditor and more thorough coverage of contingent liabilities, the state-owned enterprise debt, and collateralised financing.

"The IFIs can encourage and support borrowing countries’ efforts to enhance public debt disclosure, limit non-concessional borrowing when necessary, and reduce debt vulnerabilities," they said.

"We remain committed to assisting low-income countries in their responses to the COVID-19 pandemic. We will continue to work with the G20, Paris Club partners, the IMF, the World Bank, and other creditors to secure debt sustainability and transparency, including promoting timely creditor coordination and fair burden-sharing," they said.

The number confirmed coronavirus cases across the world has gone up to 6,429,453 while the death toll reached 385,873 on Thursday morning, according to the Centre for System Science and Engineering of the Johns Hopkins University.