G7 Finance heads approved on Friday the extension the G20 provisory freeze in debt payments, per Reuters report.
Furthermore, the group of economic giants recognized the call for extensive debt restructuring sooner or later.
Impertinent Red Dragon
At the same time, the finance ministers from G7 took aim at the Red Dragon member of G20.
It is because China is not very straightforward with its lending practices.
The ministers of the Group of Seven said in a joint statement that they “strongly regret” the dealings of some countries.
Specifically, some countries did not fully cooperate on the G20 Debt Service Suspension Initiative (DSSI).
Some countries, for instance, labeled their state-owned entities as commercial lenders, according to Reuters.
Beijing failed to include loans by China Development Bank, which is state-owned, and other government-controlled institutions in its official debt totals.
China Must Share the Burden
After a G7 teleconference, Japanese Finance Minister Taro Aso spoke to reporters.
The Chinese contribution to the Debt Initiative is “totally insufficient,” Finance Minister Aso said.
Aso of Japan told G7 that they must push China further.
Likewise, DSSI’s year-end deadline needs an additional extension.
Just as important, we must make sure that the “burdens” will be split up equally “by all creditors.”
World Bank: It is Simplistic
The Group of Twenty (G20) decided April to grant a debt moratorium to the 73 poorest nations through year-end, Al Jazeera reported.
Pakistan, in particular, would benefit the most as it could potentially save $2.7 billion, according to the World Bank.
Coronavirus has devastated developing countries, which consequently made the implementation quite challenging.
Thus, it triggered an extension of the initiative.
World Bank President David Malpass said in a blog post last week:
The freeze on “debt payment” is too superficial and won’t “provide light at the end of the debt tunnel,” he said.
Malpass added that the IMF and the World Bank would brainstorm on “additional steps on debt to free up resources” next month.