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G20 Led by Saudi Arabia Mulls Debt Relief Plan for Poor Nations Marred by Covid-19 Pandemic

Saudi Minister of Finance Mohammed Al-Jadaan attends a virtual meeting of G20 finance ministers and central bank governors in Riyadh on July 18, 2020.

Saudi Minister of Finance Mohammed Al-Jadaan attends a virtual meeting of G20 finance ministers and central bank governors in Riyadh on July 18, 2020.

Ghazanfar Ali Khan 

RIYADH – The G20 under the current presidency of Saudi Arabia will consider extending a debt payments suspension program for the poorest countries as financial policymakers from the world’s biggest economies continue to take “exceptional measures” to support debt-ridden nations and expedite global economic recovery. This was announced here on July 18 following a virtual meeting of the G20 finance ministers and central bank governors.

Saudi Arabia’s finance minister Mohammed Al Jadaan and the Kingdom’s central bank governor Ahmed Al Kholifey chaired the virtual meeting.  Saudi Arabia has taken a global leadership role in combating Covid-19 pandemic and it stands firmly in unison with the international community, especially with the G20 member states, to deal with this international crisis, said a report released on this occasion.

Al-Jaadan said: “The world is still living through Covid-19 and there is a lot of uncertainty around, but I am optimistic as always. Saudi has weathered an even worse oil crisis in the past and worse geopolitical situation in the past and …we recovered strongly, as this is not going to be an exception… We are watching what’s happening in the world,” Al Jadaan said, highlighting that the G20 group is prioritizing its efforts to support the global economic recovery.

Referring to the Debt Service Suspension Initiative (DSSI), a joint communique released by the G20 after the meeting, he said: “We will consider a possible extension of the DSSI in the second half of 2020, taking into account the development of the Covid-19 pandemic situation.” The G20 group has made progress on the DSSI, which runs until the end of 2020. A total of 42 countries have requested support so far under the scheme, amounting to the deferral of an estimated $5.3 billion in debt repayments, the group said.

The International Monetary Fund (IMF) and the World Bank Group will send a report to the G20 in October explaining the financial conditions of the countries eligible for debt relief. There is, however, a need for “further progress and [the G20] strongly encourages private creditors to participate in the DSSI on comparable terms when requested by eligible countries”, the communique added. It is important to note here that the G20 member states agreed in April this year to a time-bound suspension of debt service to deal with the Covid-19 pandemic.

The statement further said: “We are determined to continue to use all available policy tools to safeguard people’s lives, jobs and incomes, support global economic recovery, and enhance the resilience of the financial system, while safeguarding against downside risks.” Referring to the concerns raised by the World Bank that China, a member state of G20 and the largest creditor, was not participating fully, the G20 officials urged all bilateral creditors to implement the DSSI fully and honestly.

Saudi Arabia has already pledged $500 million to support global efforts to combat the pandemic. It has and urged other nations and organizations to help bridge an $8 billion financing gap. The Kingdom will also be providing SR10 million to help the Palestinians in the West Bank and Gaza Strip combat the coronavirus, according to an initiative by the King Salman Humanitarian Aid and Relief Center (KSrelief). On the institutional level, the Kingdom is collaborating with various local and international organizations to contain the spread of this disease. Saudi Arabia has provided $10 million to the World Health Organization (WHO) as part of its efforts to combat the novel coronavirus.

Meanwhile, Saudi Arabia’s Social Development Fund (SDB) has announced a package of more than $2.4 billion to help micro-enterprises and small businesses.  The Saudi leadership has also taken care of its huge expatriate population, whose number exceeds 11 million including 2.7 million Indians living and working in Saudi Arabia. All expatriate workers have free access to the Kingdom’s health facilities for the treatment of coronavirus. They have also been exempted from paying a levy for renewal of their residence permits for several months.

All these measures and the generous allocations for funds have been commended by the international community, global organizations, and regional agencies. The Foreign Ministers of the Organization of Islamic Cooperation (OIC) member states hailed the efforts made by the Kingdom. On its part, the World Health Organization (WHO) praised Saudi Arabia for the financial aid it has granted to help international fight against the pandemic. Dr. Tedros Adhanom Ghebreyesus, WHO Director-General, expressed his appreciations for King Salman for his contribution of $500 million to support the world in its battle against Covid-19.

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