November 11

Will China Help Ease the COVID-19 Debt Burden on Emerging Markets?

In mid-October the G20 nations announced they were extending a debt suspension initiative for some of the world’s poorest nations.

This means that the Debt Service Suspension Initiative (DSSI), initially rolled out in June, will now run until the end of June 2021, with some suggesting that it could be further extended until the end of next year.

The DSSI offers a moratorium on bilateral loan repayments owed to G20 members and their policy banks. The scheme is available to 73 low-income nations, allowing them to use funds to address the social and economic fallout from the pandemic.

As of November 6, 44 countries had applied for some form of debt suspension, according to the World Bank.

The bank calculates that the DSSI could result in a total of $12.2bn in cumulative savings for these emerging markets, with countries such as Pakistan ($3.6bn), Angola ($1.8bn), Kenya ($630.8m) and Ethiopia ($472.9m) among those that stand to save the most under the scheme.

Photo courtesy of StockSnap.

Source: Oxford Business Group (link opens in a new window)

Coronavirus, Finance, Impact Assessment