Moves made to ease debt issues of poorest countries

Finance ministers and central bank governors of the Group of 20 are supporting a temporary suspension of bilateral government loan repayments for the world's poorest countries.
The agreement, reached after a virtual meeting late on Wednesday, is part of a plan to address debt vulnerabilities in low-income countries due to the coronavirus pandemic and restore global growth.
Finance Minister Liu Kun said at the meeting that China supports the suspension of debt repayment for the poorest counties and pledged to contribute to the plan. He called on multilateral development banks to participate, too.
"China will take a more proactive fiscal policy, raise the fiscal deficit ratio, issue special central government bonds, increase the quota of local government special bonds and continually implement tax and fee cut policy," Liu said.
"All members should cooperate and intensify policies to offset shocks, through conducting strong fiscal and monetary policies and jointly maintaining stability of global industrial chains, to prepare for economic recovery," he added.
The debt suspension, for both principal and interest payments, will start on May 1 and last until the end of this year. All official bilateral creditors are asked to participate in the initiative, according to a communique.
Using 'full toolbox'
Chen Yulu, vice-governor of the People's Bank of China, the nation's central bank, attended the G20 meeting, which focused on coordinating international efforts.
"The G20 finance ministers and central bank governors endorsed the G20 Action Plan in response to the COVID-19 pandemic, which sets out the G20's commitment to using all available policy tools to address the impact of COVID-19 on the economy, preserve global financial stability and support robust economic recovery," said a statement on the PBOC's website on Thursday.
The International Monetary Fund's board granted immediate relief for debt service to 25 countries earlier this week. The fund also doubled annual access limits for emergency financing, and 10 countries have already received emergency assistance, according to the IMF.
The fund downgraded its projection for the world's 2020 economic outlook on Tuesday, calling it the worst global downturn since the Great Depression of the 1930s and adding that only a partial recovery may be seen in 2021.
"To help countries steer through the depth of the recession and support their recovery, we are prepared to use our full toolbox and $1 trillion firepower," IMF Managing Director Kristalina Georgieva said during the G20 Finance Ministers and Central Bank Governors Meeting.
For low income countries, the IMF official said, the fund plans to triple its concessional lending, seeking $18 billion in new loan resources for the Poverty Reduction and Growth Trust. The terms of such loans are more generous than those of market loans. It will also likely need at least $1.8 billion for subsidies. The IMF is considering use of special drawing rights-supplementary foreign exchange reserve assets-to support the lending.
Information disclosed after the virtual meeting shows that the beneficiary countries of the debt service suspension include 76 with low per capita incomes that lack the financial ability to borrow from the World Bank's original lending arm, the International Bank for Reconstruction and Development, and "all least developed countries as defined by the United Nations".
Bilateral talks
Foreign Ministry spokesman Zhao Lijian said last week that China never forces countries that have repayment problems to repay debt, but aims to solve problems bilaterally.
Developing countries, especially low-income ones, will face bigger challenges amid the coronavirus pandemic, and China will talk to these countries one-on-one, he said.
James McCormack, global head of sovereigns at Fitch Ratings, said that the outbreak and sharp fall in oil prices makes additional downgrades of sovereign debt ratings likely over the rest of this year. These are common during economic and financial crises of the type global economy and credit markets are now entering.
The nature of the pandemic and the speed of government responses may change the rating agency's forecasts on sovereigns' debt trajectories or their ability to access financing, he said. The scope of action is highlighted by Fitch's downgrade of Gabon to "CCC" from "B" on April 3, reflecting that risks to Gabon's sovereign debt repayment capacity have risen significantly due to liquidity pressure from the fall in oil prices.
In emerging markets, such downgrades have been more common during shocks that cause abrupt changes in external financing conditions, he added.
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