Gandhi Nagar (Reuters) – The failure of the G20 to achieve a breakthrough on debt restructuring for vulnerable countries is a “grave concern”, the head of a United Nations agency said on Monday as the body seeks pauses in debt repayment for poor nations amid rising poverty.
The debt restructuring talks made little progress during the third finance meeting of the G20 countries in India, Reuters reported on Monday, as the bloc was unable to overcome key differences and low attendance due to domestic issues adding to the roadblocks.
“I think the G20, so far, the finance ministers (and) central bank governors’ negotiations have not really been able to advance a breakthrough on this question of debt and debt restructuring,” Achim Steiner, administrator of the U.N. Development Programme, told Reuters in an interview.
“That is obviously of grave concern.”
Though Zambia, locked in default for almost three years, struck a deal last month to restructure $6.3 billion in debt owed to governments abroad including China, many challenges remain.
The U.N. Development Programme has urged global finance ministers to give poor countries debt repayment breaks, estimating the COVID-19 pandemic and subsequent surge in inflation and borrowing costs had pushed an extra 165 million people into poverty.
The jump meant more than 20% of the world’s population – around 1.65 billion people – were now living on less than $3.65 a day and were struggling to put food on the table, according to the agency.
“So, either you evolve the Common Framework rapidly in order to allow it to be the vehicle, or you need to adjust other mechanisms,” Steiner said.
Common Framework is a platform set up by G20 during the pandemic to speed up debt resolution and simplify the process of getting overstretched countries back on their feet.
“So, there are certain elements of the international financial activity that are trying to increase their focus in terms of financing, but I think the bottom line is, as of 2023, July, the issue of debt restructuring is really not advancing at all on a scale that is called for and needed,” Steiner added.
Earlier this year, the International Monetary Fund agreed to temporarily raise borrowing limits to aid vulnerable countries.
