G30 group calls for urgent debt help for poor countries

LONDON (Reuters) - Rich nations, development banks and private creditors need to ramp up support for poorer countries to prevent humanitarian crises and a “lost decade” of global growth, the prominent G30 group of former policymakers and academics said on Wednesday.

How to support struggling countries is the most pressing issue being discussed during the virtual annual meetings of the International Monetary Fund and World Bank this week amid warnings 150 million people could be pushed into extreme poverty by the end of next year.

The G30, which includes former U.S. Treasury Secretary Larry Summers, urged the IMF to boost lending.

“We call on the IMF to double its concessional lending as a matter of urgency,” Summers said, adding that IMF members should also “rapidly... agree two new $500bn SDR allocations, to ensure funds are available for this crisis and future crises”.

SDRs, or Special Drawing Rights, are a form of reserve asset created by the IMF, which act as a currency or token that determines how much countries can borrow from the fund.

The G20 group of richer nations has agreed to extend its Debt Service Suspension Initiative (DSSI), according to a draft communique seen by Reuters.

The scheme has so far frozen around $5 billion of poorer countries’ debt payments, but pressure is on the main development banks and private creditors to give more help too.

However, many poorer countries are reluctant to push for their government bond payments to be frozen as it would likely be classed as default by credit ratings agencies and trigger complex legal problems if creditors opted to sue.

The G30 highlighted China as a major lender to poorer countries and said it should also provide more debt relief.

“We call on China to join the Paris Club,” former Mexican central bank governor Guillermo Ortiz said, referring to the group that oversees official sector debt relief.

The G24 - a group of 24 developing countries - also urged public and private creditors on Tuesday to extend debt relief.

The IMF updated its global growth forecasts on Tuesday, slightly improving its estimate for 2020’s global growth.

Reporting by Elizabeth Howcroft; Editing by Gareth Jones