A commentary by the DRGR authors Kevin Gallagher, Shamshad Akhtar, Stephany Griffith-Jones, Ulrich Volz and Moritz Kraemer, published at the Italian Institute for International Political Studies (ISPI).
The G20 measures in 2020 to support low income countries (LICs) facing unsustainable debt burdens were intended to give nations the space to mitigate consequences of the virus and rebuild their economies in a manner consistent with development and climate goals.
It has now become acutely apparent that such efforts were incomplete and inadequate. It is paramount that the G20 build on past work on debt relief and supplement it with new thinking and financing. Now that a significant increase in the allocation of Special Drawing Rights was endorsed last week, the G20 needs to build on its debt relief schemes to bring all countries in debt distress and all creditors to the table and to ensure that the recovery is aligned with the world’s broader development and climate goals.
Before COVID-19 started to spread across the world the International Monetary Fund (IMF) had already warned that global debt for both the public and private sectors had reached $188 trillion and that two-fifths of low-income countries were at high risk of, or already in, debt distress.