On 12th May, the Rt Revd Nick Baines, Bishop of Leeds, received a written answer from Baroness Sugg on debt incurred because of COVID-19.
The Lord Bishop of Leeds: HL3474 To ask Her Majesty’s Government what assessment they have made of the letter published in the Financial Times on 14 April, and signed by 18 African and European leaders, which called for an immediate moratorium on all bilateral and multilateral debt payments, both public and private, until the COVID-19 pandemic has passed; and what plans they have, if any, to support that request.
Baroness Sugg: The UK Government is deeply concerned about the impacts of the COVID-19 pandemic on the public finances of low-income developing countries. During 2020, developing countries were projected to spend around $36 billion on servicing external debts to bilateral, multilateral and private sector creditors. In this time of crisis, it is vital that creditors work together to ensure that servicing debts does not prevent countries protecting their citizens and economies.
The UK, alongside the G20 and the Paris Club of official creditors, has committed to a temporary suspension of debt service repayments from the poorest countries. This official sector effort could provide up to $12 billion of additional fiscal space for eligible countries until the end of the year, allowing their governments to redirect finances towards mitigating the health and economic impacts of COVID-19. This initiative provides time to assess what further assistance these countries may need.
The G20 has called for the private sector creditors to participate on comparable terms and has asked the Multilateral Development Banks to explore whether there are options for them to participate, while maintaining their current credit ratings and low cost of funding which are important for supporting their client countries.