Balance health and economic objectives in recovery plans: Nirmala Sitharaman

Our Bureau New Delhi | Updated on October 14, 2020 Published on October 14, 2020

Finance Minister Nirmala Sitharaman   -  PTI

She was participating in G20 Finance Ministers and central bank governors meet via Video Conferencing

India has emphasised that the updated commitments in the G20 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.

Participating in the G20 Finance Ministers and Central Bank Governors meeting under the Saudi Arabian Presidency on Wednesday through Video Conferencing, Finance Minister Nirmala Sitharaman explained the core guiding principles for the updation of the G20 Action Plan commitments and highlighted the need to balance the health and economic objectives in the recovery plans.

Adding to this, the Finance Minister also spoke about the need to consider the heterogeneity of policy responses among member countries, international spillovers from domestic policy actions and reforms required in the global regulatory regimes particularly concerning the procyclicality of credit rating downgrades.

It may be recalled that the updates to the G20 Action Plan in response to Covid-19 was endorsed by the G20 Finance Ministers and Central Bank Governors on April 15 this year.

Ministers and Governors of G20 countries had gathered on Wednesday to discuss the current global economic outlook and G20’s response to the Covid-19 pandemic.

Debt revamp programme

During this meeting, in light of the continued liquidity pressures, the G20 Finance Ministers and Central Bank Governors agreed to extend the Debt Service Suspension Initiative (DSSI) by six months, and to examine by the time of the 2021 IMF/WBG Spring Meetings if the economic and financial situation requires a further extension of the DSSI, an official release said.

One of the key outcomes of the G20 Action Plan has been the 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 the end of 2020.

Talking about addressing the debt vulnerabilities of low-income countries, Sitharaman observed that in a longer-term, a more structural treatment of debt is required. She emphasised that this process should primarily be guided by the objective of helping such countries overcome the fiscal stress caused by the pandemic. The Finance Minister underlined that it would be important to take into consideration the circumstances and concerns of both creditors and debtors and that in the process of debt restructuring, care must be taken to not saddle the debtor countries with overly burdensome conditionalities, the release added.

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Published on October 14, 2020
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