The International Monetary Fund said Thursday that it does not rule out an “economic collapse in some countries “if the Group of Twenty does not take urgent measures to alleviate the debt burden of these countries and reduce the repercussions of the pandemic which is still out of control.
“We could see the economic collapse in some countries, unless G20 creditors agree to accelerate debt restructuring and suspend debt service while the restructuring is negotiated, “IMF Chief Executive Kristalina Georgieva and Director of Strategy for the United States said Thursday. Celia Pazarbasioglu fund in a post on the blog.
When the pandemic began, rich G-20 countries decided to suspend debt service payments for poor countries until the end of 2020, and then extend it until the end of 2021.
Parallel to the initiative to suspend debt service, the group created in November 2020 a “common framework” aimed at restructuring and even canceling the debts of the countries that apply in this regard.
But so far private creditors, especially Chinese ones, have refrained from implementing this mechanism.
The two officials of the International Monetary Corporation stressed that “it is necessary that private creditors pay in practice debt cancellation under similar conditions “.
Despite the assistance measures adopted since the start of the pandemic, “about 60% of low-income countries are at high risk or are heavily indebted”.
In 2015, this percentage was below 30%, as confirmed by the two officials.
“Difficulties are piling up for many of these countries,” added Georgieva and Pazarbasioglu, stressing that the spread of new Corona virus mutations could further hinder economic activity.
The two officials asked “from now in then multilateral action to combat vaccine inequality globally and to support swift and orderly debt settlement “.
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