Debt freeze extension to poor states: G20 stops short of declaration

Finance officials from the Group of 20 countries has called for all official bilateral creditors to implement fully a short-term debt freeze for the world's poorest countries, but stopped short of extending the initiative into next year.

Sources briefed on the G20 meeting said there was strong support for extending the standstill beyond the end of 2020, given the severity of the economic fallout from the coronavirus pandemic, but the group's final communique said only that the issue would be considered in the second half of 2020.

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It also said nothing about growing calls for cancelling - not just deferring - the debts of some of the poorest countries.

The Debt Service Suspension Initiative, agreed by G20 ministers in April, has proven challenging to implement, with only 42 of 73 eligible countries expressing interest thus far, saving just $5.3 billion in service payments instead of the $12 billion initially promised.

World Bank officials have singled out China, the largest creditor for developing nations, for holding back debts owed to its state-owned development and state-owned companies.

Decisions on extending the freeze would come after the IMF and World Bank complete a report on the liquidity needs of countries before the next G20 finance officials' meeting in October, the communique said.