China to start consultations on debt standstill with poor borrowers

Beijing: China will carry out specific work through bilateral consultations at the request of relevant poor borrowers in accordance with the G20 Debt Service Suspension Initiative.

China has put forward a systematic proposition on the debt service suspension based on the consensus reached by G20 leaders when participating in the discussion of Debt Service Suspension Initiative for Poorest at the G20 Finance Ministers and Central Bank Governors Meeting, an official from the Chinese Finance Ministry told China Economic Net (CEN) on Tuesday.

Many countries have echoed such a proposition presented as follows: The proposition suggests a closely coordinated approach be adopted by multilateral, bilateral creditors and official and private creditors when implementing the debt service suspension for least developed countries.

It advocates relevant parties respond promptly to the request of the poorest countries in their battle against the COVID-19 epidemic, and provide efficient and provisional support distinct from traditional rescheduling.

It emphasizes abidance by the rules. As international financing is a market behavior that complies with certain rules, debt suspension should also conform with the rule of law, the rational spirit of contract, and be consistent with international practice. That will help maintain the order of the international financial market.
It appeals to the balance of interests. When implementing the debt service suspension initiative, the concerns of creditors and debtors should be equally respected based on the basic conditions of the countries involved so as to avoid moral hazard.

It welcomes efforts to promote the development of the poorest countries. Through economic growth, the borrowers’ debt burden can be alleviated, and the financing capacity in the international market safeguarded, and hence attain sustainable development.
With the efforts of China, all parties eventually reached a consensus on the participation of multilateral, bilateral official creditors and private creditors in the initiative through corresponding ways.
At the G20 Finance Ministers and Central Bank Governors Meeting on April 15, all parties applauded the impact of the initiative in alleviating short-term liquidity difficulties of the poorest countries and centralizing resources to counter the COVID-19 epidemic.
To ensure effective implementation of the initiative, China calls on multilateral and private creditors to take appropriate actions as soon as possible to help the poorest countries overcome the difficulties.
Meanwhile, China has actively provided support to the international community through multilateral and bilateral platforms.

So far, China has donated $20 million dollars to the World Health Organization (WHO); designated $10 million dollars under the China Poverty Reduction and Regional Cooperation Fund in ADB exclusively for regional projects to fight against the pandemic, etcetera.
And China will continue to provide assistance within its capacity to developing countries under the framework of South-South cooperation.