President Muhammadu Buhari

Nigeria, others get debt relief from China, G-20 bloc

Web Editor | ConsumerConnect

Countries under the G-20 Group and China have agreed to grant debt relief to the poorest countries in the world, which are categorised as International Development Association (IDA) nations by the World Bank.

ConsumerConnect learnt that David Malpass, President of the World Bank, at the ongoing April 2020 virtual Spring Meetings of the Bank and International Monetary Fund (IMF), said with effect from May 1, 2020, there would be debt relief for these economies.

Subsequently, Nigerian finance experts have applauded the G-20 Group and China’s move, which described it as the right move as the COVID-19 pestilence has already worsened situations in the poor countries.

Malpass stated that “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.

“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.”

The World Bank Chief added that countries under the International Development Association (IDA) are those with per capita income below the established 2020 threshold of $1,175.

Thus, he stated that countries, such as Nigeria and Pakistan, are IDA-eligible based on per capita income levels, and are also creditworthy for some IBRD borrowing. They are referred to as ‘blend’ countries.

A moratorium is the suspension of debt repayments while debt relief is the reorganisation of debt in any shape or form so as to provide the indebted party with a measure of respite, either fully or partially.

Malpass said a system will be set up to monitor how developing countries utilise the funds made available by the debt 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.

“There is also within the debt relief initiative, the idea that there will be monitoring and assessment of the debt sustainability of poor countries,” he said.

According to him, the whole process itself will amount to transparency, saying, “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.”

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