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G20 finance chiefs agree to help debt-distressed countries
At their final meeting under Indonesia’s chairmanship this year, finance ministers and central bankers of the Group of Twenty (G20) members agreed to support countries in debt distress.
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Finance Minister Sri Mulyani Indrawati (left) and Bank Indonesia Governor Perry Warjiyo (right) brief the press after the G20 Finance Ministers and Central Bank Governors Meeting in Washington, DC, on Oct. 14. (Finance Ministry/Public Relation Team)
The Group of Twenty (G20) finance chiefs have concluded their final meeting under Indonesia’s presidency this year without a joint statement but still managed to reach several agreements, one of which is to help countries in debt distress.
Indonesian Finance Minister Sri Mulyani Indrawati, who chaired the meeting, said the group had agreed on the need to deal with the problem of debt in low- and middle-income countries via a common framework for debt restructuring.
“We have the unintended consequences of weak economies as well as potentially worsening debt distress in many countries -- not only low-income countries, but also middle-income and high-income countries,” Sri Mulyani said after the group had concluded its fourth and final Finance Ministers and Central Bank Governors (FMCBG) Meeting under Indonesia’s G20 leadership.
She elaborated that many countries were finding themselves in a position of debt distress, as they faced high interest rates on top of the already heavy debt loads they were bearing because of the sudden need to expand fiscal spending to deal with the pandemic.
Faster-than-anticipated monetary tightening by many central banks had also increased the risk, as it led to weakened local currencies and even higher yields, both of which made borrowing more costly.
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The group also conveyed its commitment to other measures aimed at helping countries in debt distress, namely global financial-safety nets and increased support from multilateral-development banks for countries “in critical situations”.
