Merkel sees 'further steps' ahead to ease developing countries' debt

By: AFP      Published: 11:26 PM, 20 May, 2020
Merkel sees 'further steps' ahead to ease developing countries' debt

The international community may soon take "further steps" to ease developing nations' debt burden on top of a payments freeze decided last month, German Chancellor Angela Merkel said Wednesday.

"We took a correct step with the debt moratorium by the G20 and Paris Club, but it's only a moratorium" on repayments, Merkel told reporters in Berlin.

In her Wednesday talks with the heads of economic groups including the World Trade Organization, International Labour Organisation, World Bank, IMF and OECD "it was definitely highlighted that this might not be the final step," Merkel added.

"Especially with regards to debt sustainability, further steps may have to follow."

Last month, G20 and Paris Club creditor nations agreed to waive most debt payments for the world's poorest countries in 2020 as a result of the coronavirus crisis.

But with only around $20 billion of debt affected, the payment freeze hits just a fraction of the roughly $365 billion owed by African countries alone -- around one-third of it to China.

Some poorer countries have demanded outright debt cancellation, as the lockdowns imposed by many countries have upturned the global economy, putting severe strains on government revenues just as many nations need to step up health spending to combat the virus.

"Consumption behaviour is limited in highly-developed countries" due to lockdowns, Merkel said. "Of course that has dramatic consequences for developing nations."

"Fighting poverty will certainly be an essential focus in the years ahead," she added.