G20 leaning towards extending debt-payment freeze – France finance ministry source
A consensus is emerging among G20 nations to extend a debt-payment freeze next week for poor countries for an additional six months, a French finance ministry source said on Friday.
Members of the Group of 20 economic powers and the Paris Club of creditor nations agreed in April to suspend until the end of the year debt payments owed to them by poor countries to free up resources for tackling the coronavirus outbreak.
G20 finance ministers are due to take a decision on what to do after the end of the year when they hold an online meeting next Wednesday, the source said.
“The number we think we will land on is six months, which seems reasonable as that will give time to evaluate the impact of the crisis on debt sustainability,” the source said.
After six months, the debt servicing freeze could be extended for those countries still facing liquidity problems to cover maturities falling due.
More in-depth debt restructurings could be considered at that time for countries whose debt burdens were deemed unsustainable, the source added.
Unlike the debt-payment freeze, such treatment would be considered on condition that private sector creditors also participated, there was an IMF programme for the debtor country and if there is comparable treatment among all official public sector creditors.
Private sector lenders have faced criticism for not also freezing debt payments owed to them, while China has been singled out for not suspending payments owed to state-owned China Development Bank.
Source: Reuters (Reporting by Leigh Thomas; Editing by Hugh Lawson)