Debt service suspension for vulnerable nations should be extended by 6 months: FM to G20

Finance Minister Nirmala Sitharaman on Wednesday made a case for extending the Debt Service Suspension Initiative by six months till December 2021 for boosting support to the most vulnerable economies amid the COVID-19 crisis.

The World Bank and the International Monetary Fund (IMF) had asked G20 countries to establish the Debt Service Suspension Initiative (DSSI) in April last year.

The DSSI''s objective was to help countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people.

Since it took effect on May 1, 2020, the initiative has delivered about USD 5 billion in relief to more than 40 eligible countries. The G20 has also called on private creditors to participate in the initiative on comparable terms.

The suspension period, originally set to end on December 31, 2020, has been extended through June 2021.

Participating in the Second G20 Finance Ministers and Central Bank Governors (FMCBG) meeting under the Italian Presidency, Sitharaman discussed policy responses to global challenges to restore strong, sustainable, balanced and inclusive growth, the finance ministry said in a statement.

Apart from supporting the financing needs of the most vulnerable economies, G-20 member countries discussed the progress on the international taxation agenda, promoting greener transitions and the pandemic related financial regulation issues, it added.

Noting the discourse in the G20 on climate change, the finance minister emphasised on the need for progress on commitments made under the Paris Agreement on climate finance and technology transfer.

She suggested that while channelling flows of international financial institutions into green transitions, it should also be recognised that the immediate challenge, particularly for developing and low-income countries, is to restore growth.

"For boosting support to the most vulnerable economies, the Finance Minister supported extending the Debt Service Suspension Initiative, by six months, till December 2021," it said.

Sitharaman also urged all G20 members to ensure equitable access and widespread distribution of vaccines.

India is running an ambitious programme of rapid domestic vaccination and has emerged as a key global producer of vaccines and medical products, especially during the pandemic, she said.

She also stated that India has covered over 87 million citizens in its vaccination drive so far and has supplied over 64 million doses to 84 countries, including 10 million doses as grant.

The finance minister asked the G20 High Level Independent Panel on Financing the Global Commons for Pandemic Preparedness and Response to draw upon such country experiences.

Talking on global growth projections, she underlined the need for continued coordination amid the persistence of uncertainties associated with the virus.

Sitharaman further said the G20 Action Plan has served as a good guidance tool and shaping recovery is the mainstay of its current update.