G7 Finance Ministers Support Debt Relief for Poor Countries Combating COVID-19 Crisis

The G7 supports a process for debt cancellation for vulnerable countries, they announced this morning after Treasury convened a special Finance Ministers meeting. In a G7 statement, the ministers also encouraged an extension of the G20 Debt Service Suspension Initiative (DSSI) into next year for the world’s 73 poorest countries.

"The G7 recognizes that some countries will need debt cancellation and now is calling for a process to cut debts," stated Eric LeCompte, the Executive Director of Jubilee USA Network and a United Nations finance expert. "With the poorest countries struggling with the economic and health impacts of the coronavirus, countries desperately need more aid and debt relief."

In April, the G20 agreed to a process for the 73 poorest countries to stop paying debts through 2020. So far, the initiative has allowed 43 of the poorest countries to free $5.3 billion for health and social spending to respond to the pandemic.

The G7 statement encouraged private creditors and banks to "voluntarily" participate in the debt payment suspension and seemed to criticize China for not fully participating in the initiative.

"Reading between the lines, the G7's statement is hard on China and weak on private creditor participation," said LeCompte. "All Chinese government entities should stop taking debt payments from poor countries and stronger action must be taken to ensure the private sector joins the coronavirus debt relief initiatives."

Earlier this month, several Finance Ministers joined the World Bank and IMF chiefs in calling to extend the DSSI into 2021 and arguing that private creditors should stop collecting poor country debts.

"It's time to extend debt relief initiatives to all developing countries, including Middle-Income Countries, struggling with the coronavirus pandemic," shared LeCompte. 

In October and November, G20, IMF and World Bank meetings will discuss the future of coronavirus debt suspension and relief efforts.

Read the G7 Statement here.