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IMF warns of ‘economic collapse’ unless G20 extends debt relief

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IMF warns of ‘economic collapse’ unless G20 extends debt relief

On Thursday, the IMF urged advanced G20 economies to expand and improve their debt relief initiative, warning that many countries face a serious crisis without the aid.

“We may see an economic collapse in some countries unless G20 creditors agree to accelerate debt restructurings and suspend debt service while restructurings are negotiated,” IMF chief Kristalina Georgieva said in a blog, adding that it is critical that private creditors also offer relief.

The G20 Debt Service Suspension Initiative (DSSI) expires at the end of the year and, without a renewal, countries could face financial pressures and spending cuts just as new variants of Covid-19 are spreading and expected. increase interest rates, he said.

“The debt challenges are pressing and the need for action is urgent. The recent Omicron variant is a stark reminder that the pandemic will be with us for a while, ”Georgieva said on the blog co-authored by Ceyla Pazarbasioglu, director of the fund’s Strategy, Policy and Review Department.

Given the problems with the debt relief program and the common framework for dealing with private creditors, only three countries have so far requested relief (Chad, Ethiopia and Zambia) and faced “significant delays”.

The framework “has not yet delivered on its promise. This requires quick action, ”he said.

Source Credit: TheGuardian

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