Debt relief, other measures needed for developing countries – Pres Ali tells UN

…calls for commercial creditors to also extend debt relief

The United Nations (UN) was on Monday reminded by President Dr Irfaan Ali in his address that developing countries need continued assistance in the form of debt relief, in order to weather the economic effects of the COVID-19 pandemic.

President Dr Irfaan Ali during his address

The UN was at the time holding a virtual meeting of Heads of State on international debt architecture and liquidity. In his video message, President Ali spoke of the need for immediate relief to be provided to developing countries.
He recalled the developed world’s previous pledge to allocate a percentage of their Gross National Income (GNI) to development assistance. He noted that only four countries – Denmark, Luxembourg, Norway and Sweden – met or exceeded their target.
“Immediate relief should be provided. This could be achieved if developed countries honour the pledge made to allocate at least 0.7 per cent of their GNI to official development assistance. The developed world’s achievement of this pledge has been underwhelming. In 2019, official development assistance totalled $152.8 billion or approximately 0.3 per cent,” he explained.

The United Nations

That being said, the President lauded the steps taken so far by the global community when it comes to debt relief. He also applauded the recent initiative of the International Monetary Fund (IMF) to provide Special Drawing Rights (SDRs) of US$650 billion.
According to Ali, this would enhance global liquidity while helping countries navigate the fallout of the pandemic. But he made it clear that more needs to be done and the debt relief measures also adopted by commercial creditors.
“We would like to thank the G-20 countries for initiating the debt servicing suspension initiative, which allows for the postponement of debt repayments for more than 70 low-income countries. However, we would strongly urge them to seriously consider granting further extensions of the standstill period, to support the recovery efforts of poor countries.”
“Given the reality that many poor countries are saddled with debt distress, we advocate for broad-based debt relief for developing countries through international frameworks similar to The Paris Club arrangements.”
President Ali noted that in the long term, the pandemic has aggravated the levels of poverty around the world. He pointed out that the existing structure of international debt compounds the issues faced by poorer and developing countries, making their recovery from the economic impact of COVID that much harder.
“Guyana would, therefore, like to take this opportunity to urge developed countries and international financial institutions to immediately revisit and reform the existing international debt framework, so as to make it more responsive to developing countries’ needs,” President Ali said.
The high-level virtual meeting was convened as part of the Financing for the Development in the Era of COVID-19 and Beyond Initiative (FFDI), an initiative which serves as a call to action for countries to address liquidity and debt vulnerability. There were previous FFDI meetings in 2020, which sought ways to push the economic recovery of countries due to the pandemic.
President Ali joined approximately 20 other world leaders from the region and the wider international community, including Barbados Prime Minister Mia Mottley, Jamaican Prime Minister Andrew Holness, Venezuelan President Nicolas Maduro and Canadian Prime Minister Justin Trudeau.
During the meeting, there were opening remarks from UN Secretary General António Guterres. Afterwards, there was a roundtable discussion with IMF Managing Director Kristalina Georgieva, World Bank Group President David Malpass and Organisation for Economic Co-operation and Development (OECD) Secretary General Ángel Gurría.
Also at the roundtable was the recently appointed World Trade Organisation (WTO) Director General Ngozi Okonjo-Iweala, where measures geared at overcoming debt and lack of liquidity were discussed.