G-7 plans to extend debt relief for low-income countries until 2021

A response team employee takes the temperature of passengers disembarking from an Ethiopian Airlines flight at N’Djili International Airport in Kinshasa, Democratic Republic of the Congo.

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G-7 finance ministers discussed on Monday extending the freeze on debt service payments to low-income countries until 2021, a spokesperson for the US Treasury said.

In a reading, the US official said the G-7 discussed the G-20’s debt relief plan and “additional options for low-income countries, including an extension of the suspension of the debt. debt until 2021 “.

The freeze for the 73 poorest countries is expected to expire at the end of the year. The program, called the G-20 Debt Service Suspension Initiative, was designed to ensure these countries have the money to fight the coronavirus pandemic.

According to the US official, the G-7 called on “all official bilateral creditors” to fully implement the G-20 debt plan.

Yun Sun, an expert on China and a non-resident member of the Brookings Institution, said the language appeared to be a veiled reference to China.

“I would say it was an unnamed blow against China, or at least China will feel it as a veiled blow,” Yun Sun said in an email.

China is Africa’s largest official creditor, holding 20% ​​of Africa’s public debt – and many countries eligible for debt relief are located in Africa, according to the Jubilee Debt Campaign. Although China is a member of the G-20, questions have arisen about its full participation in the debt relief effort.

Oxfam said in July that 41 countries had requested debt relief, saving them $ 9 billion in 2020.

The nonprofit group criticized the temporary suspension of G-20 debt as “woefully inadequate” to stave off the worst effects of the pandemic. Oxfam noted that the measure does not impose any action on the part of private creditors or multilateral development banks such as the World Bank.

G-7 officials also discussed support for the manufacture and distribution of COVID-19 vaccines and treatments, especially related to low-income countries.

Finance ministers also discussed support for Lebanon. The Lebanese economy was already suffering from a crisis before a massive explosion in Beirut destroyed much of the capital, including its seaport, on August 4.

Officials also noted improvements in economic conditions in the G-7 economies.

US Treasury Secretary Steven Mnuchin hosted the G-7 meeting via teleconference earlier on Monday.

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