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In the time of pandemic, debt relief efforts need to go further

31 15 12

In the last few months, due to the devastating effect the coronavirus pandemic has had on the global economy, the fiscal clock has been ticking more rapidly than ever before for many small and vulnerable states across the world.

With Joe Biden’s victory in the United States presidential election, which increased the possibility for meaningful global cooperation on pressing issues disproportionately affecting vulnerable states like climate change, coupled with the development of several COVID-19 vaccines that could help bring the pandemic under control, these countries recently started to see a faint light at the end of the tunnel.

But the path to economic salvation is still full of obstacles, and the upcoming winter months are still expected to be long and dark for many nations whose economies are crumbling under the weight of the extra debt they accumulated to respond to the pandemic.

In this context, the G20’s recent decision to extend until the middle of next year the Debt Service Suspension Initiative (the DSSI), which it introduced in April to help the world’s poorest countries cope with the economic fallout of the COVID-19 crisis, has been most welcome.

But extending the DSSI on its own cannot resolve the mammoth pandemic-related fiscal challenges poorer nations are facing. Encouragingly, the G20 seems to recognise this, and have also introduced a “Common Framework for Debt Treatments beyond the DSSI”, which aims to address the problem of unsustainable debts many DSSI-eligible countries will continue to face in the aftermath of the pandemic on a case-by-case basis.

While these initiatives by the G20 are undoubtedly important steps in the right direction, their scope is limited. For all of the world’s nations to get back on their feet after this........

© Al Jazeera

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