The G20 warns of the danger of the indebtedness of developing countries – El Heraldo de Chihuahua

Bali, Indonesia. The G20 leaders have expressed concern about the “deteriorating debt situation” facing some vulnerable middle-income countries, and will call on official and private creditors to quickly respond to requests for debt remediation.

The draft G20 leaders’ statement, seen by Reuters, includes much stronger language on debt issues and acknowledges that the problems extend well beyond the poorest countries.

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The draft stresses the importance of all official and private creditors participating in debt relief and bearing a fair burden. But he did not mention China, which has come under fire from Western countries and international financial institutions for delaying debt restructuring efforts.

The leaders said they would intensify efforts to implement the joint framework to address debt in a “predictable, timely, orderly and coordinated manner,” according to the draft.

The framework was created by the G20 and the Paris Club of official creditors at the end of 2020 to help low-income countries cope with the crisis caused by the COVID-19 pandemic.

However, the results were elusive, and only three countries submitted formal requests for debt remediation.

The heads of the International Monetary Fund and the World Bank, along with officials from the United States and other Western powers, have pushed unsuccessfully to expand the G20 framework to vulnerable middle-income countries, but that effort has been blocked. By China, which is now the world’s largest sovereign debt creditor.

Chinese President Xi Jinping has urged international financial institutions and commercial creditors to “get involved” and make efforts to reduce and suspend developing countries’ debt.

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Xi emphasized that these organizations “are the major creditors of developing countries,” and urged the International Monetary Fund to “accelerate” SDR loans to low-income countries.

“China launched the G20 Debt Service Suspension Initiative (DSSI) from all sides and within it it has suspended the most among all members,” said the Chinese leader. “China has also worked with some G20 members under the Common Framework for Debt Dealing, thus helping developing countries in difficult times,” he said.

It is estimated that debt restructuring is one of the issues under discussion in Bali, and formulas such as DSSI, created in the midst of the pandemic, can be sought to help the most vulnerable countries. Argentina, Mexico and Brazil are interested in creating conditions that would allow them to restructure their long-term debts.

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