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Ramaphosa lobbies G20 for suspension of debt repayment

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President Cyril Ramaphosa has lobbied G20 member states to persuade multilateral development banks to suspend debt repayments further to help emerging countries resuscitate their economies.

President Cyril Ramaphosa participating at the virtual G20 Leaders’ Summit. Picture: Kopano Tlape / GCIS

PRESIDENT Cyril Ramaphosa has lobbied G20 member states to persuade multilateral development banks to suspend debt repayments further to help emerging countries resuscitate their economies.

Speaking at a virtual G20 Leaders’ Summit over the weekend, Ramaphosa urged G20 member states to use all of their persuasive powers to convince all creditor countries to address the problem of burgeoning and unsustainable developing country debt.

In April, the World Bank’s Development Committee and the G20 Finance Ministers endorsed the Debt Service Suspension Initiative (DSSI) which is aimed at allowing poor countries to concentrate their resources on fighting the Covid-19 pandemic.

Ramaphosa said the DSSI had helped to defer the immediate debt service payments of participating countries, and the recently agreed 6-month extension will provide further support.

“However, in addition to the suspension of debt service payments, large financing needs remain necessary to both stave off a deep humanitarian crisis and stimulate economic rebirth,” Ramaphosa said.

“The IMF should urgently consider the issuance of additional Special Drawing Rights and for the allocation of these disproportionately to member countries that need the resources most.”

Covid-19 has triggered the deepest global recession since World War II. In Africa, economic activity is expected to contract by 3.2 percent in 2020, with the region falling into a recession for the first time in 25 years.

The G20’s DSSI offers a temporary suspension of the official sector or government-to-government debt payments.

This was in response to a call by the World Bank and the International Monetary Fund to grant debt-service suspension to the poorest countries. The DSSI was initially in force until the end of 2020, but the G20 has agreed to extend it by six more months to the end of June due to the continued liquidity pressures.