World Bank warns G20 against doing too little to tackle debt problems
"Debt reduction and transparency will enable productive investment, a key to achieving an earlier, stronger and more lasting recovery," World Bank President David Malpass told G20 leaders during a videoconference meeting.
World Bank President David Malpass on Saturday warned G20 leaders that a failure to provide more permanent debt relief to some countries now could lead to increased poverty and a repeat of the disorderly defaults seen in the 1980s.
Malpass said he was pleased by the progress made by the Group of 20 major economies on increasing debt transparency and providing debt relief to the poorest countries, but what was being done was far from enough.
"Debt reduction and transparency will enable productive investment, a key to achieving an earlier, stronger and more lasting recovery," Malpass told G20 leaders during a videoconference meeting. "We need to guard against doing too little now, and then suffering disorderly defaults and repeated debt restructurings as in the 1980s," Reuters reported him as saying.
The infamous 'lost decade' of the 1980s saw many highly indebted countries in Latin America and elsewhere unable to pay their debts, delaying growth and efforts to reduce poverty.
Malpass, who began pushing for debt relief early in the COVID-19 crisis, warned that debt challenges were becoming more frequent, including in Chad, Angola, Ethiopia and Zambia, and failure to provide "more permanent debt relief" left a bleak outlook for reducing poverty.
G20 leaders are poised to formally endorse the extension of a temporary freeze in official bilateral debt payments by the poorest countries, and adoption of a common framework for debt restructuring in the future.
Some countries, including China, have remained reluctant to embrace the need for debt cancellation, although top economists say that will likely be needed in some cases. Private-sector creditors have also failed to join in, despite repeated calls by G20 leaders, civil society groups and the United Nations.
Malpass said the Bank was working closely with the G20 in countries affected by fragility, conflict and violence, including the Sahel, Somalia, Lebanon, Gaza and the West Bank.
In Sudan, he said he was hopeful that arrears clearance could move quickly, especially given the inflow of refugees from neighbouring Ethiopia, which would allow substantial World Bank funding to begin flowing almost immediately.
The United States last month moved to remove Sudan from its list of state sponsors of terrorism, clearing away one of the hurdles facing the heavily indebted African country, which has some $60 billion in external debt.
Trump chooses golf
US President Donald Trump chose to go golfing after making a brief online appearance at the G20 summit.
Trump, who has still not accepted defeat following President-elect Joe Biden's victory in the recent presidential polls, appeared distracted during the entire virtual conference. He chose to stare at something on his desk out of sight during a nine-minute speech by Saudi King Salman bin Abdulaziz welcoming countries to the Group of 20 nations meeting that was being hosted by his kingdom, virtually.
While the distracted look did not come as a surprise, Trump shocked many by tweeting about election fraud as the G20 meeting was underway. Tweeting to comment on an encounter with Republican leaders of the Michigan state legislature, he promised: “We will show massive and unprecedented fraud!”