World Bank Head supports call for timely, meaningful debt relief for developing countries

President of the World Bank Group, David Malpass has supported calls by various developing countries’ leaders, including Guyana’s President Irfaan Ali, for the world’s poor to benefit from “timely and meaningful” debt relief in order to cope with key development challenges, including those brought on by the coronavirus pandemic.
“These are immediate, critical needs as countries work to recover from the global pandemic, and we can no longer afford to kick the debt can down the road – developing countries need relief now,” said Malpass, who heads one of the most powerful financial development institutions in the world.
Malpass outlined that on the part of the G-20, those governments should instruct and create incentives for all their public bilateral creditors, and forcefully encourage the private creditors under their jurisdiction, to participate fully in debt relief efforts.
“For now, too many creditors in G-20 countries are continuing to take payments, and the current playing field is tilted to favour creditors, including the vulture variety, over poorer borrowers. This leaves no viable escape from poverty for the people of the debtor countries,” he highlighted.
According to the World Bank Head, G-20 creditors “should seek timely and meaningful debt relief for distressed borrowers, through both lower interest rates and actual write-downs in some cases”.
He urged that the common framework reached by the G-20 should avoid repeating the “extend and pretend” approach that delayed recovery after previous debt crises.
Debt restructurings, he outlined, need to reduce the amount owed and should be reached with less litigation and more transparency regarding their terms.
“By taking swift, broad, and forward-looking action, the G-20 nations can help people in poverty-stricken countries break out of the devastating economic cycle that sovereign debt crises bring,” he contended.
In the same vein, Malpass was quick to point out that for their part, developing countries themselves also need to take steps to ensure transparent and sustainable national policies that support the poor.
As current Chair of the G77 + China bloc, President Irfaan Ali recently made a passionate call for developing countries to be given some form of debt relief to cope with the challenges being faced as a result of the pandemic.
During the Group of 77 + China ministerial and technical meeting hosted by Guyana, President Ali suggested an integrated response to the threat posed by the COVID-19 pandemic, the climate change crisis, and the adverse effects of these on the 2030 Agenda for Sustainable Development.
The President said it is necessary for responses to the pandemic and the climate crisis to be placed at the centre of advancement of the Development Goals. To this end, the Head of State called on the international community to ensure greater financing is provided to meet the 2030 Agenda on Sustainable Development, particularly in the post-COVID-19 era.
According to the President, mainly due to high indebtedness, many developing countries are constrained in their efforts to generate sufficient resources towards achieving the “2030 Agenda”.
It was on this basis, he issued a call for the international financial community to explore and implement ways in which debt can be reduced so as to allow developing countries the fiscal space to achieve the SDGs.
The Guyanese leader further stated that the interrelation of the current pandemic and Sustainable Development Goals is a source of concern for all since the pandemic is depleting the financial and human capital assets of countries.
“Our strategies to combat the impact of COVID-19 pandemic have forced countries to increase their internal and external debts. This is likely to lead to negative growth and exacerbate poverty,” he argued.