G20 finance ministers and central bank governors begin their first meetings under the Indonesian G20 presidency on Thursday. The two-day meetings address global pandemic response, recovery and preparing for future crises. Developing country access to debt relief, aid and vaccines are high on the agenda.
“The prolonged economic crisis and new virus variants derailed global recovery projections,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “Developing countries are in dire need of vaccines and support for economic recovery."
Developing country debts as a proportion of their economies rose last year by about five times the usual yearly rise during the preceding decade. The G20 launched a debt reduction process in November 2020. Chad, the first country to apply to the G20 debt reduction initiative, has yet to receive any relief. Zambia and Ethiopia, the other countries that applied, are further behind in the process.
“The G20 needs to offer speedy and deep debt relief and compel private creditors to match it,” added LeCompte, a United Nations finance expert. "History teaches us that the longer we wait to address a debt crisis, the more difficult it becomes to solve the crisis."
Finance ministers will review progress on aid commitments to developing countries. The World Bank projects that average incomes in 40% of developing countries will be lower next year than they were in 2019. Developing countries received about $230 billion and wealthy countries received more than $400 billion of $650 billion in emergency currency or Special Drawing Rights that the IMF created in August.
The G20 could affirm the direction of a pandemic response vehicle that could accept donations of Special Drawing Rights from wealthy countries. The IMF's Resilience and Sustainability Trust could fund long-term, affordable loans to developing countries.
“While G20 leaders are making progress, we are worried we aren't moving quickly enough to solve this crisis or prevent the next crisis from happening,” remarked LeCompte.