PARIS (Reuters) – A consensus is emerging among G20 countries to extend the freeze on debt payments for poor countries for another six months next week, a source at the French finance ministry said on Friday.
Members of the Group of 20 economic powers and the Paris Club of creditor countries agreed in April to suspend debt payments owed to them by poor countries until the end of the year in order to free up resources for fight against the coronavirus epidemic.
G20 finance ministers are due to make a decision on what to do after the end of the year when they hold an online meeting next Wednesday, the source said.
“The figure we think we’ll land on is six months, which seems reasonable as it will give time to assess the impact of the crisis on debt sustainability,” the source said.
After six months, the debt service freeze could be extended for countries still facing liquidity problems to cover maturities coming due.
Deeper debt restructurings could be considered at that time for countries whose debt burdens were deemed unsustainable, the source added.
Unlike the debt payment freeze, such treatment would be considered provided that private sector creditors also participate, that there is an IMF program for the debtor country, and that there is comparable treatment among all creditors of the formal public sector.
Private sector lenders have been criticized for not also freezing debt payments owed to them, while China has been singled out for not suspending payments due to the China Development Bank, owned by China. the state.
Reporting by Leigh Thomas; Editing by Hugh Lawson