G7 finance ministers to back a six-month extension of debt relief programme

Japan's Finance Minister Taro Aso

G7 finance ministers are expected on Friday to signal their support for extending a debt relief programme aimed at helping the poorest countries weather the coronavirus pandemic, three sources briefed on the issue told Reuters.

The ministers of the Group of Seven advanced economies are set to meet by video conference to discuss global economic developments and the continued impact of coronavirus, which has infected nearly 32m people worldwide.

Although the IMF has argued in favour of extending the debt relief programme’s year-end deadline by a year through 2021, the G7 ministers are likely to back an initial extension of six months, the sources said. “There is backing for a six-month extension, and there will be discussion of the broader issue of debt restructuring,” one of the sources said.

The G7 finance ministers’ backing for an extension of the debt moratorium through June 2021 would help smooth the way for a decision by the larger Group of 20 group of major economies. The G20 finance ministers are set to meet on 14 October, though the decision would likely be formally adopted by G20 leaders at their summit in November.

Japanese Finance Minister Taro Aso told reporters on Friday he could not comment on what will be discussed at the G7 meeting.

Under a programme dubbed the Debt Service Suspension Initiative (DSSI), the G20 major economies agreed in April to offer a freeze on debt service payments to the 73 poorest countries through year-end. But implementation of the debt freeze has been challenging, as COVID-19 has hit the poorest countries particularly hard, triggering calls for an extension of the programme. World Bank President David Malpass said in a blog post last week that although the G20 debt relief initiative was a good start, deeper and more lasting solutions were needed.

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