Officials from the G20 countries (Group of 20 major economies) have announced plans to suspend both principal repayments and interest payments on loans for the world’s poorest countries. The waiver will last up to the end of the year.
According to the Saudi Finance Minister, Mohammed al-Jadaan, the suspension will thus release more than $20 billion for the underprivileged countries to use in fighting the COVID-19 pandemic.
The move has also garnered support from the Paris Club of creditors, which in late March canceled 67% of Somalia’s debt, translating to $1.4 billion. However, the debt relief applies to only those countries that are current in their debt service payments to the World Bank and the IMF.
Reuters reports that the agreement will cover $12 billion to $14 billion in bilateral debt service payments owed by the 76 International Development Association (IDA) countries, including Angola, through the end of the year.
Furthermore, the International Institute of Finance reports that private creditors will roll over or refinance $8 billion of the debt to the poorest countries, in addition to the roughly $12 billion in debt payments to be suspended by bilateral creditors.
The G20 is an international forum for the governments and central bank governors from 19 countries and the European Union (EU). In total, the G20 economies account for around 90% of the gross world product (GWP), 80% of world trade, two-thirds of the world population, and almost half of the world land area.