Top creditors to suspend poorest countries' debt payments, France says

Leigh Thomas, Reuters

Posted at Apr 14 2020 11:23 PM

PARIS - Major international creditors have agreed to suspend debt payments owed by the poorest countries this year, throwing a financial lifeline to help cope with the coronavirus crisis, France's finance minister said on Tuesday.

Some 76 countries, of which 40 are in sub-Sahara Africa, were eligible to have debt payments worth a combined $20 billion suspended, out of a total of $32 billion the countries were to spend on debt servicing this year.

"We have obtained a debt moratorium at the level of bilateral creditors and private creditors for a total of $20 billion euros," Bruno Le Maire told journalists.

The government creditors, including not only the Paris Club but also China and other members of the Group of 20 economic powers, are to suspend $12 billion under the agreement, which remains to be finalised on Wednesday.

Separately, a senior German official spoke of a debt moratorium by official creditors worth up to $14 billion.

"We're glad in particular that China agreed to participate in this moratorium. All that will free up money for the countries that need it the most," Le Maire said.

China has become a major creditor to developing countries, especially in Africa, but there is little transparency about how much they owe.

Private creditors have agreed on a voluntary basis to roll over or refinance $8 billion in debt, a French finance ministry source said.

Of the total $32 billion due this year, the remaining 12 billion euros is owed by multilateral lenders, mainly the World Bank, Le Maire said, urging such lenders to join the debt relief initiative.

The World Bank and the International Monetary Fund called last month on government creditors to give debt relief and the IMF said on Monday it would do so for 25 countries under its Catastrophe Containment and Relief Trust, which has about $500 million in resources on hand.

French President Emmanuel Macron said in a television address to the French nation on Monday that African countries should be helped by "massively cancelling their debt".

Le Maire said that at the end of the year outright debt cancellation should take place on a case-by-case basis and in coordination with multilateral lenders depending on the economic situation of the countries as well as developments in commodity markets and capital flows.