Earlier, Chinese Finance Minister has said that the country has extended debt relief to developing countries worth a combined 2.1 billion US Dollars under the G20 framework, the highest among the G-20 members in terms of the amount deferred.
However, this is a very small fraction compared with the debt developing countries owe to China.
As per a World Bank study, China accounts for more than 60% of the poorest countries’ official bilateral debt to G20 countries.
It is also not yet fully clear how much relief has actually come into effect or whether it’s a work in progress.
Last month, World Bank Chief has expressed serious concerns over China not fully participating in G-20 debt relief scheme even as African countries, hammered by the COVID-19 pandemic will need more long-term help than the latest G20 Debt Service Suspension Initiative (DSSI) offers them to manage their economies.
At the recently concluded 15th G20 Leaders’ Summit, the countries committed to implementing the Debt Service Suspension Initiative (DSSI) including its extension through June 2021.
The G20 launched the DSSI in April this year to address the immediate liquidity needs of low-income countries as the COVID-19 pandemic added risks of debt vulnerability.
The DSSI was initially in force until the end of 2020. However, due to the continued liquidity pressures, the G20 had agreed to extend the DSSI by six more months.
The G20 will examine the matter again in 2021 to see if the economic and financial situation requires a further extension of the DSSI.
Report by: Anshuman Mishra, Beijing, China