Finance Minister Nirmala Sitharaman yesterday participated in the Meeting of G-20 Finance Ministers and Central Bank Governors under the Saudi Arabian Presidency through video conferencing. The Ministers and Governors of G-20 countries had gathered to discuss the current global economic outlook and G-20’s response to the COVID-19 pandemic, along with other G-20 Finance Track priorities for the year 2020.

In the first session, Ms Sitharaman spoke on s to the G-20 Action Plan in response to COVID-19 which was endorsed by the G-20 Finance Ministers and Central Bank Governors in April this year. Ms Sitharaman emphasized that the d commitments in the G-20 Action Plan have to be kept relevant in the current policy context for the action points to remain effective as a policy response to COVID-19.

Explaining the core guiding principles for the updation of the G-20 Action Plan commitments, the Minister highlighted the need to balance the health and economic objectives in the recovery plans. She also spoke about the need to consider heterogeneity of policy responses among member countries, international spillovers from domestic policy actions and reforms required in the global regulatory regimes particularly with respect to the procyclicality of credit rating downgrades.

One of the key outcomes of the G-20 Action Plan has been the Debt Service Suspension Initiative (DSSI) which provides time-bound suspension of debt service payments for the low income debtor countries that request forbearance. The initiative was initially in force till end of 2020. 

During this meeting, in light of the continued liquidity pressures, the G-20 Finance Ministers and Central Bank Governors agreed to extend the DSSI by six months and to examine by the time of the 2021 IMF and WBG Spring Meetings, if the economic and financial situation requires a further extension of the DSSI.

Talking about addressing the debt vulnerabilities of low income countries, Ms Sitharaman observed that in a longer term, a more structural treatment of debt is required.

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