On Monday, G20 Finance Ministers hold their third meeting hosted in Gandhinagar by the Indian government. The gathering comes as IMF global economic growth forecasts remain the lowest in decades.
“Global economic challenges are pushing countries deeper into debt,” said Eric LeCompte, Executive Director of Jubilee USA Network, who has followed IMF and G20 policies for more than a decade. “The pandemic, the Russia-Ukraine war and high interest rates are raising debt in developing countries and these countries don't have the resources to respond to their food and climate crises.”
In June, after more than two years, governments holding Zambia debt announced agreement to reduce collection by the equivalent of 40%. However, payments will increase if Zambia’s economy does better, and will not decrease if it does worse than expected. Zambia still has to negotiate a restructuring of near $7 billion in debt owed to private creditors.
“More than 60% of Zambia's people live in poverty,” noted LeCompte. "Not enough debt was cut to address the suffering of Zambia's people."
The debt renegotiation took place under a process set by the G20 in late 2020 to cut developing country debts, the Common Framework for Debt Treatments. Zambia and Chad are the only countries to receive some relief so far.
Finance Ministers will review a report on additional needs for multilateral development bank lending. Former US Secretary of Treasury Larry Summers and former chairperson of the Fifteenth Finance Commission of India Nand Kishore Singh chair the group issuing the report.
“Development banks need more money and need to implement reforms to effectively distribute additional resources to respond to regional crises,” stated LeCompte.
G20 commitment to transfer $100 billion in emergency pandemic aid – Special Drawing Rights (SDRs) – from wealthy to poor country economies will also be on the agenda. More than $400 billion, out of $650 billion the IMF created in 2021, went to wealthy economies which committed to redirect $100 billion of their share to developing countries.