Last week, the UN Secretary-General, António Guterres made an important remark on debt restructuring. He reminded G20 countries the urgency to reform the international debt architecture, emphasizing on the need for an operational debt relief and restructuring framework that takes account of vulnerabilities.
“Poorer countries pay much higher borrowing costs than developed countries – and their economies are downgraded when they consider restructuring their debt or applying for debt relief,” Guterres said in his statement released during the opening of the G20 countries latest meeting.
Representing 80 percent of global economic power, the countries pledged to make his desire a reality.
Leaders of the G20 countries acknowledged the urgency to restructure debt. They promised to “urge all relevant creditors, including Non-Paris Club countries like China and private creditors to involve in the process.” It is a commitment based on the G20 common framework for debt treatment, which was initiated in 2020 to offer relief for low-income countries affected by the coronavirus pandemic.
The assurance from the leaders came in the same week the International Monetary Fund’s managing director, Kristalina Georgieva, warned of a crisis unless China and other G20 economies, move more quickly on debt relief. The finance ministers met in Indonesia this week.
