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Group of Thirty calls for urgent, concerted efforts to tackle debt crisis

(Xinhua)    10:21, October 15, 2020

WASHINGTON, Oct. 14 (Xinhua) -- The Group of Thirty (G30) on Wednesday said rising debts had threatened funding for development priorities such as public health among the most vulnerable countries, calling for urgent policy response to support the poorer.

"A lost decade of growth in large parts of the world remains a plausible prospect absent urgent, concerted, and sustained policy response," according to a newly released preliminary report titled Sovereign Debt and Financing for Recovery After the COVID-19 Shock.

The G30, established in 1978, is an independent global body comprising economic and financial leaders from the public and private sectors and academia.

The international response to COVID-19 in middle- and low-income countries pales by comparison to the domestic policy response in advanced economies, former U.S. Treasury Secretary Lawrence Summers, co-chair of the working group's steering committee, said in a webinar Wednesday.

Summers, who is a professor at and past president of Harvard University, noted that new creditors -- bond holders, China's policy banks, hybrid and commercial actors -- represent the bulk of debt payments from low-income countries in the wake of the pandemic shock.

Adapting the international financial architecture to these and other new stakeholders will take time, but urgent responses to the pandemic cannot wait for this process to run its course, according to the report, which called on the international community to adapt system to ensure proper role for China and other new creditors.

The G30 urged the International Monetary Fund (IMF) to mobilize global liquidity on a larger scale than ever before, scale up its crisis lending in low-income countries, and use far more of its existing non-concessional resources to mitigate economic fallout from COVID-19.

The report was released on the same day as Group of Twenty (G20) major economies agreed to extend the Debt Service Suspension Initiative (DSSI) by another six months. G20 previously endorsed the debt relief program to allow the poorest countries to suspend payments on official bilateral debt until the end of 2020.

Debt relief and supporting the poorest are among the issues being discussed during the ongoing virtual annual meetings of the International Monetary Fund and World Bank Group, which runs from Oct. 12 through Oct. 18.

World Bank Group President David Malpass welcomed G20's extension of debt relief program, calling for further efforts to help the poorest countries.

"Some core DSSI-related problems are still unresolved, notably lack of participation by private creditors and incomplete participation by some official bilateral creditors," said the World Bank chief.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Wen Ying, Bianji)

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