Question

Critically examine why some countries are unwilling to take advantage of the G20 Sponsored Debt Relief Arrangement

Answer 1

Some countries are not taking advantage of the G20 Sponsored Debt Relief Arrangement because
1.G20 leaders have committed to a debt freeze until 2021, but the need for an emergency economic stimulus of $100 billion as requested by African nations , is not met to cater to healthcare , education, social safety net which are an immediate priorities.
2.There is no clarity whether private sector creditors will participate in such a move or not? Also, the issue of much larger debts of low- and middle-income countries is still unresolved.
3.The deferral in payment of debt is based on a net present value neutral basis, which means there will be no reduction in the payment of debt. This is only a deferral.
4.The move doesn’t cover a wide range of creditors and hence seems less effective as the countries face a mounting challenge due to Covid-19 pandemic.