The Intergovernmental Group of 24 (G-24) urged the extension of the G20 Debt Service Suspension Initiative (DSSI) beyond FY2020, asking the G20, International Monetary Fund (IMF), and the World Bank Group (WBG) to work on putting in place a framework and mechanisms to foster timely, orderly and adequate debt resolution to involve all public and private creditors.
The G-24 call came during a meeting held on Tuesday as a part of the IMF and the WBG’s Board of Governors annual meetings that kicked off on Monday.
An estimated 100 million people have been thrown into poverty in developing countries, and workers in lower-middle income countries have lost 15 percent of their income, G-24 said in a statement.
“We are being squeezed in an economic vise as a consequence of COVID. Real productive capacity has been lost. Revenues and remittances are down whilst capital flight has increased, but we must spend to fight this pandemic and vigorously restart our economies. Sovereign debt distress is growing while International Markets are constraining. The prospect of a lost development decade is very real,” said Ken Ofori-Atta, Minister for Finance of Ghana and Chairman of G-24.
G-24 meeting stressed that recovery from the pandemic’s impacts depends on the timely distribution of affordable vaccines to all countries on the basis of need.
Meanwhile, recovery could be set back by the continuous surges of infections as social distancing measures are eased, in addition, risks to financial stability remain, which present potential headwinds for recovery, according to the statement.
Extraordinary fiscal measures to invest in health, protect jobs, and provide social protection in emerging markets and developing countries (EMDCs) has significantly increased deficit to GDP ratios, and public debt levels have surged, G-24 said in the statement.
It added that despite the international financial institutions responding with emergency support, external financial assistance still falls short of what is needed in the ongoing extraordinary times.
“We need to see a fierce urgency for change from all actors, with all options on the table. Now is not the time for the world’s great economic powers to turn inward. We must use this opportunity to build back better and greener and effect a tectonic shift of the global financial architecture,” said Ofori-Atta.
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