Today, as the International Monetary Fund (IMF)/World Bank Spring Meetings close, UNDP commends the decisions of the IMF, the World Bank Group, and the G20 to immediately suspend debt service payments of 76 countries for one year, including 40 countries in Sub-Saharan Africa.
This debt relief will play a critical role in helping countries to prepare, respond and recover in the face of the COVID-19 pandemic, including to navigate its devastating social and economic impacts.
However, as the UN Secretary-General sets out in his new report, Debt and COVID 19: A Global Response in Solidarity, the agreed suspension of debt is not enough. Focusing on the poorest countries alone will not be sufficient to address the scale of this emergency.
Debt relief should not be based on the level of income but on vulnerability. A hurricane can wipe out an economy in the course of 8 hours. A pandemic will put a continent on freeze for months. These have nothing to do with income, wealth or GDP. They have everything to do with vulnerability.
The United Nations encourages all parties to put in place a debt moratorium for the next two years for all vulnerable countries. If the virus does not discriminate between countries based on their income level, nor should the international community.
As laid out in the UN Secretary-General’s report, we are calling on all creditors – public and private, bilateral and multilateral - to take three steps towards debt sustainability in these extraordinary times.
First, to establish an immediate debt moratorium for all developing countries to provide “breathing space” for all that need it to focus on crisis response.
Second, to provide targeted debt relief for countries with unsustainable debt levels and provide the policy space needed to achieve the SDGs.
Third, as the immediate crisis recedes, to revisit the long-standing challenges of the international debt architecture, to prevent debt defaults that could lead to prolonged financial and economic crises.
In line with the Addis Ababa Action Agenda, all actions taken should be in line with countries’ strategies to finance progress towards the Sustainable Development Goals (SDGs).
Shutting down economies to prevent the spread of this virus saves lives, but without simultaneous action, decades of hard-won development progress could be lost. More than half a billion more people could be pushed into poverty, according to recent research.
This crisis has laid out in the starkest way possible just how interconnected our world is. We must act in borderless solidarity to defeat it.