Former New Zealand PM urges G20 to help poorest countries amid pandemic
Finance ministers and central bankers from the world’s largest economies plan to hold an extraordinary meeting on Nov. 13 to discuss bolder action to help poor nations struggling to repay their debts.
The Group of 20 ministers plan to meet a week prior to the annual gathering of heads of government on Nov. 21-22, according to a copy of the meeting’s agenda seen by Bloomberg.
The meeting could mark the next phase in the global debt-relief drive by bolstering coordination between government creditors over how to restructure the debts of poor economies hit hard by the coronavirus pandemic.
After some opposition, emerging economies led by China, the world’s largest official lender, agreed to the common framework to restructure bilateral debt at the last G20 meeting of ministers this month.
A common strategy means closer co-ordination with the Paris Club of creditors in what western governments hope can convince China to increase its role in the debt relief efforts. The club is a grouping of mostly western creditor governments.
World Bank President David Malpass has called for greater debt-relief participation from China, as well as private creditors like hedge funds and banks. The Asian nation is owed almost 60 per cent of the bilateral debt that the world’s poorest countries would be due to repay this year.
China has said it is fully implementing a temporary suspension agreed by the G20 in April to help indebted countries, mostly in Africa. Commercial creditors and multilateral lenders should take greater responsibility for giving debt relief to the poor, Chinese Foreign Ministry spokesman Zhao Lijian said in an Oct. 12 briefing.
China, however, will likely refrain from working closely with western governments in debt restructuring to keep its upper hand in negotiations with borrower countries, analysts say.
“Beijing is likely to oppose the common framework and will instead seek to maintain its flexibility in negotiations with debtor countries,” Gabriel Wildau, a senior vice-president at consulting firm Teneo, said in a research note. “China does not oppose debt relief per se but wants to avoid constraints on its negotiating leverage.”
Emails to the Chinese embassies in Paris and Washington seeking further comment were not immediately answered.