UN Chief Recognizes Need for Debt Relief for Middle-Income Countries

Many middle-income countries are grappling with an unsustainable debt burden as a result of the pandemic. However, there is still no global answer to their crisis situation. Now the UN chief is also calling for extensive measures.

As the World Bank found, upwards of 150 million people worldwide will be pushed into extreme poverty as a result of the crisis by the end of 2020 – with 8 of 10 of those people in middle-income countries. However, the vast majority of countries in the middle-income sector ist still neither eligible for the G20’s “Debt Service Suspension Initiative” (DSSI) urged by the World Bank and the IMF nor the “Common Framework for Debt Treatments beyond the DSSI”. To make debt relief available for middle-income countries at risk is a key demand of the DRGR project. 

A demand that is now shared by the UN chief, as his remarks to the General Assembly show. In particular, António Guterres calls for a suspension of their debt into 2022 to cope with the social and economic impact of the virus. Next to that, he highlighted the importance of more international cooperation and better mechanisms, including debt swaps, buy-backs, and cancellation. Unused Special Drawing Rights (SDRs), supplementary foreign exchange reserve assets defined and maintained by the IMF, must be re-allocated to support vulnerable middle-income countries, Mr. Guterres added.

Read more about his statements here.

For a new proposal how to implement debt relief while advancing the implementation of Agenda 2030 and the Paris Agreement, read further here.


Meeting the Moment – Debt Relief for Middle Income Countries (Video)

On June 1 the T20-associated Webinar addressed the risk of external debt distress which middle-income countries are facing: As the world runs the risk of a financial crisis from the COVID-19 pandemic, MICs are showing particularly high vulnerabilities. This is worrying, as most of these countries are not covered by current debt relief schemes. Read the full announcement here.

Questions concerning the consequences of rising debt levels in MICs for the global community and ways to support affected countries were discussed by the following speakers, among them DRGR report authors Shamshad Akthtar and Kevin P. Gallagher:

  • Avinash PERSAUD, Special Envoy to Mia Mottley, the Prime Minister of Barbados
  • Carmen REINHART, Vice President and Chief Economist, World Bank Group
  • Shamshad AKHTAR, Chairperson, Pakistan Stock Exchange; Former Central Bank Governor and Minister of Finance, Pakistan
  • Rakesh MOHAN, President and Distinguished Fellow, Centre for Social and Economic Progress (CSEP), India
  • Franco BRUNI, Vice President, ISPI; Lead Co-Chair, T20 Italy TF9 on International Finance
  • Kevin P. GALLAGHER, Director, Global Development Policy Center, Boston University; Co-Chair, T20 TF9 on International Finance

Video Recording (starting at 32:20 with the presentation by Shamshad Akthar):


Webinar: Meeting the Moment – Debt Relief for Middle Income Countries

ISPI, the T20 National Coordinator and Chair, and Boston University Global Development Policy Center are co-promoting the T20 Associated-event “Meeting the Moment: Debt Relief for Middle Income Countries”, in cooperation with the Creco Research Institute, the Centre for Social and Economic Progress, The Group of 24, the Centre for Finance and Development at the the Graduate Institute of International and Development Studies, the Labour 20 and LPEM FEB UI. The public webinar will take place on Tuesday, June 1 at 10 AM EST/4 PM CEST. It features Shamshad Akthar from the Core Group of the Debt Relief for a Green and Inclusive Recovery Project, giving a preview of our next analysis.


Climate Policy Initiative Discusses Debt for Climate Swaps

A recently published blueprint by the Climate Policy Initiative (CPI) examines the existing interventions on providing debt relief, highlighting that middle-income countries do not get the needed support to revive growth and climate action. It, therefore, proposes eligibility and condition criteria for Debt for Climate Swaps.