COVID-19: China, G-20 agreed to give debt relief to Nigeria, other poorest countries in the world

 Mohammed al-Jadaan, finance minister of Saudi Arabia
China and G-20 countries have agreed to give debt relief to the poorest countries in the world which are classified as IDA countries by the World Bank.

This is according to comments made by David Malpass, the World Bank president, on Friday at the ongoing virtual April 2020 virtual Spring meetings of the World Bank and International Monetary Fund.

“I take note that in the G-20 meetings, China is supporting the international agreement to allowing moratorium of debt repayments by IDA countries if they ask for forbearance.

“IDA countries will have bilateral debt relief beginning May 1. That way, they can concentrate their resources on fighting the pandemic and its economic and social consequences.”

IDA countries are those with per capita income below an established threshold. The 2020 threshold is $1,175.

Countries, such as Nigeria and Pakistan, are IDA-eligible based on per capita income levels and are also creditworthy for some IBRD borrowing. They are referred to as ‘blend’ countries.

The G20 nations also called on private creditors “to participate in the initiative on comparable terms” and asked multilateral development banks, such as the IMF and World Bank, “to further explore the options for the suspension of debt service payments over the suspension period”. “We support a time-bound suspension of debt service payments for the poorest countries that request forbearance,” the G20 said in a statement after finance ministers held an online meeting on Wednesday.

“We agreed on a co-ordinated approach with a common term sheet providing the key features for this debt service suspension initiative.”

 Mohammed al-Jadaan, finance minister of Saudi Arabia — which is currently chairing the G20 — said the debt assistance involved could be worth “north of $20bn”.

He added that any assistance from private sector creditors would be on a voluntary basis, but said: “We encourage them to consider it in support of these countries and the people of these countries.” “Considering the speed, the spread and the severity of Covid-19 . . . this requires a very strong, bold and significant action by the G20 and by the world,” Mr Jadaan said.

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