G20 nations agree on the language to deal with debt vulnerabilities

Finance Minister Nirmala Sitharaman on Sunday said the G20 nations have agreed on language to deal with the debt vulnerabilities of developing countries.

The G20 Chair's Summary and Outcome Document issued after the meeting of the G20 Finance Ministers and central bank governors (FMCBG) meetings said the ministers recognised the urgency to address debt vulnerabilities in low and middle-income countries.

"Strengthening multilateral coordination by official bilateral and private creditors is needed to address the deteriorating debt situation and facilitate coordinated debt treatment for debt-distressed countries," the outcome document said.

Also Read | No G20 joint statement after China objections on Ukraine war

Sitharaman said one of the successes under the first FMCBG meeting of the G20 India Presidency was to "arrive at a common position on debt language".

"It is important for us to emphasise on that because the vulnerable countries are looking up to the G20 countries to find some solutions to arrive at a position where their debt stress can be relieved and many of them have been waiting for a very long time.

"So if we could arrive after so much negotiation at a common position for a language on dealing with debt, I think the G20 is now standing up to meet the challenges of debt stress which many countries are facing," Sitharaman said.

This development reflects the responsiveness of G20, the minister said, adding 4 countries -- Ghana, Sri Lanka, Zambia, and Ethiopia -- will benefit from the quick response of international institutions.

"There was also a consensus on stepping up the implementation of common framework," Sitharaman said.

In December last year, World Bank President David Malpass said the world's poorest countries owed $62 billion in annual debt service, a 35 per cent growth over $46 billion in 2021, triggering a higher risk of defaults.

Malpass also said low-income countries are at high risk of debt distress or are already in it and debt crises are also spreading to middle-income countries.

Under the G20 Presidency, India has been pressing for ways to tackle the aggravated debt vulnerabilities facing developing nations mainly on account of the continuing geopolitical tensions and the pandemic.

It is feared that if left unaddressed, the mounting debt vulnerabilities of developing nations could trigger global recession and push millions to extreme poverty.