Finally the time has come when the G20 group of the world’s largest economies decides whether or not to extend its debt suspension for poor countries beyond the end of the year. It was Pakistani Prime Minister Imran Khan, after all, who raised this point at the United Nations General Assembly session recently, adding that the best and quickest way to give fiscal space to the world’s poorest and most indebted countries is to delay debt payments for the time being or, even better, write them off altogether and let them start afresh. Earlier, World Bank President David Malpass hinted that only a six-month extension might be on the cards, as opposed to the one year that is being demanded by everybody. He also said that the relief provided so far had been less than expected since “not all of the creditors are participating fully.”
That part is understandable. Most G20 countries are in the grip of a severe financial crunch themselves and do not find the moment too suitable to indulge in some unwarranted generosity. That does not help the world’s poor countries, of course, because if there is no extension their worries will multiply very quickly. Already international credit markets are not as lubricated as they used to be. The main reason is that with almost the whole world experiencing below-zero growth, everybody has been borrowing and the point is not far when there might not be any money left for anybody to lend or borrow.
G20 finance ministers and central bankers will also discuss ways of aiding the global economy as it struggles with the steep recession that the pandemic has pushed it into. This, then, is the moment that they must be made to realise that the global recovery that they so desperately wish to engineer will not take place if the poorer countries go belly up one after the other. And many of the worse off countries will simply not be able to meet all the requirements of just staying alive in the present environment if something is not done about their pressing debt payments. What G20 decides today will impact small countries for years if not decades to come.