G20 debt service suspension initiative applications rose to 46 countries to date
G20 IFA WG advances its agenda on Financial Resilience and Supporting the Recovery
The G20 International Financial Architecture Working Group (IFA WG) concluded today its September meetings, where it discussed updates on the implementation of the Debt Service Suspension Initiative (DSSI), alongside various financial resilience and stability topics, including in the context of COVID-19 impacts and global economic recovery.
The DSSI, now in its fifth month of implementation, has received 46 applications to date from eligible countries in different regions of the world, with the most from Africa totaling to 30 countries.
Bandr Alhomaly, the Saudi G20 Presidency IFA WG policy lead, said, “All major official bilateral creditors remain committed to suspending due debt service payments to the most vulnerable countries in these challenging times. These commitments are complemented by the support of the IMF and Multilateral Development Banks to DSSI-eligible countries.”
The initiative provides an estimated USD14 billion of immediate liquidity relief by bilateral official creditors alone in 2020. The G20 is also working with International Organizations to complement these efforts, including Multilateral Development Banks, who are planning to commit USD75 billion for DSSI-eligible countries over the period between April-December 2020 alone, part of their USD230 billion commitment for emerging and low-income countries as a response to the pandemic. In addition, since late March, the IMF has provided debt relief to 28 DSSI-eligible countries and also provided financial assistance of more than USD88 billion to 81 countries, 53 of which are DSSI-eligible countries facing the economic impact of COVID-19.
The IFA WG also continued discussing ways to enhance cooperation among development partners, focusing on efforts to further develop risk insurance and catalyze private sector investment, especially in low-income countries. In addition, IFA WG discussed emerging topics related to financial resilience, including the historic level of capital outflows from emerging markets due to the COVID-19 pandemic and ways to restore sustainable flows of capital and develop domestic capital markets.
“As we begin to look towards a stronger, more resilient recovery, the G20 is exploring structural approaches to secure longer-term financing to developing countries, including through the development of domestic capital markets and crowding-in private sector investments. This comes alongside efforts to better manage risks from excessive capital flow volatility, while unlocking greater gains from enhanced cooperation between development partners,” Alhomaly added.
The IFA WG, under the Saudi G20 Presidency, will convene additional meetings in order to form and present their findings and recommendations, including their recommendation on the feasibility of extending the DSSI beyond 2020, to the G20 Finance Ministers and Central Bank Governors during their meeting on October 14.
G20 members were joined in the meetings by experts from the International Monetary Fund (IMF), World Bank Group (WBG), Bank of International Settlements (BIS), Organization for Economic Co-operation and Development (OECD), International Organization of Securities Commissions (IOSCO), and various regional development banks. The Paris Club, the UAE and Kuwait also attended part of these meetings, as they are among the creditors participating in the DSSI.