WASHINGTON (Reuters) – The Group of 20 nations must offer poorer countries a longer freeze in debt payments and other help to protect the global economy from long-term scarring inflicted by the COVID-19 pandemic, leading business and labor groups said.
Warning of job losses, increasing poverty, rising child mortality and high business failure rates in poorer countries, the groups urged G20 finance ministers, who will meet by teleconference next week, to take immediate action.
“The required contribution from the world’s leading economies is minute compared to the social and economic costs of inaction,” the International Chamber of Commerce, the International Trade Union Confederation, and Global Citizen, a group pushing to end extreme poverty by 2030, said in an open letter.
The G20’s freeze in official bilateral debt payments for the poorest countries should be extended through to end-April 2022 and broadened to include lower-middle and middle-income countries, based on their health and debt vulnerabilities, said the letter which was viewed by Reuters and will be published Thursday.
The groups noted a worrying ‘stimulus gap’ with high-income countries having spent some 8% of GDP in economic stimulus to mitigate pandemic’s impact, compared to just 1.3% for low-income countries.
They called for International Monetary Fund members to replenish the Fund’s Catastrophe Containment and Relief Trust and allow the IMF to extend a freeze in debt payments by the poorest countries through April 2022.
In addition, they called for a reallocation of existing IMF Special Drawing Rights to benefit poor countries and a major issuance of new SDRs, a step akin to a central bank printing money that was backed by IMF Managing Director Kristalina Georgieva, but ran into opposition from the United States and India.
G20 finance officials are expected to back an extension of the G20 Debt Service Suspension Initiative by six months when they meet next Tuesday, but not an expansion to include middle income countries.
Reporting by Andrea Shalal; Editing by Edwina Gibbs