The finance ministers and central banks of the G20 seek in their first meeting for this period a common agreement to seek debt relief, although the group maintains differences, said on Saturday the vice president of the Spanish Government and Minister of Economy, Nadia Calviño.
“Discussions are ongoing and I think we are making progress on communication with a view to ensuring that there is a multilateral framework that provides clarity and certainty on how these debt management processes will be carried out,” the minister said at a press conference in the Indian city of Bangalore, on the sidelines of the first major meeting under the presidency of the G20 India.
Pushed by the coronavirus pandemic and war, global debt has exceeded $300 trillion held by public and private creditors, following the largest increase in debt in a year, 2020, since World War II.
A debt deal seeks to develop formulas to manage insolvency and liquidity problems, as well as reform economic assistance and rescue programs supported by multilateral institutions to provide aid to countries on the brink of collapse.
This is the case of countries such as Zambia or Sri Lanka, deeply indebted, without sufficient capacity to maintain the functioning of their governments, and waiting for financial assistance that is delayed by the problems of these nations to meet the requirements of multilateral organizations.
“There are different views around the table on how to address it, but I think it’s fair to say that there is common agreement and shared agreement on the need to include debt relief as one of the instruments that can provide support to the most vulnerable countries,” he said.
G20 members and bodies such as the World Bank and the International Monetary Fund (IMF) have been working on reform mechanisms to provide the necessary assistance, and this is one of the priorities of the group’s finance ministers.
“Over the course of 2023 we will certainly be discussing this in Washington in the spring, and in Marrakesh in the autumn, with a view to strengthening these multilateral institutions, making sure that they remain adequately funded and that we have the appropriate instruments to play the role they are supposed to play in ensuring financial stability.” Calvin said.
Time, however, is not on the side of countries with over-indebtedness, such as Sri Lanka, which declared debt default almost a year ago and struggles to meet its basic expenses despite a series of cuts and rationing of resources to citizens.
“Time is of the essence,” acknowledged the vice president, “a solution must be found as soon as possible for these countries that are in the most fragile situation.”