- China Joins G-20 to Give Nigeria, Others Debt Relief
In a bid to help the world’s poorest nations ease the negative impact of COVID-19, the world’s second-largest economy, China, has joined forces with other members of Group 20 to give Nigeria and other poor and vulnerable nations moratorium of debt repayments.
China had announced on Tuesday it would join other Group 20 nations to see how they can better help debtors minimize the impact of COVID-19.
At the ongoing virtual meetings between the World Bank and the International Monetary Fund, David Malpass, the World Bank president, said starting from next month, there would be debt relief.
“IDA countries will have bilateral debt relief beginning May 1. That way, they can concentrate their resources on fighting the pandemic and its economic and social consequences,” he said.
“I take note that in the G-20 meetings, China is supporting the international agreement to allowing moratorium of debt repayments by IDA countries if they ask for forbearance.
“That’s very important because China is one of the biggest creditors and their participation in that effort is important and was very welcome.”
Nations with pay capita income below an established threshold of $1,175 are under the International Development Association (IDA).
Therefore, Nigeria and Pakistan are IDA-eligible based on per capita income levels despite been creditworthy for some IBRD borrowing. This type of nations are called ‘blend’ countries.
Malpass, however, said a system will be put in place to monitor how these developing nations manage the funds made available through the relief.
“So if the government saves money by not paying creditors, there is an expectation that they use it for health, education, economic rebuilding, jobs and concrete ways to help the people of their country,” he said.
“There is also within the debt relief initiative, the idea that there will be monitoring and assessment of the debt sustainability of poor countries.
“That process itself will amount to transparency. That’s going to change the way that countries have been lending into the developing world and it will improve it substantially and there will be a big benefit even to the creditors.
“It’s not the best system for creditors to be making non-transparent loans into poor countries and this is going to improve the system.”
He added that the process will ensure developing economies get more grants and concessional loans.