Nirmala Sitharaman backs 6-month extension for Debt Service Suspension initiative

Finance Minister Nirmala Sitharaman has supported extending the Debt Service Suspension Initiative (DSSI) by six months till December 31, 2021. This is necessary for boosting support to the most vulnerable economies, Sitharaman said in her virtual address at the Second G20 Finance Ministers and Central Bank Governors meeting under the Italian Presidency.

The meeting on Wednesday discussed policy responses to global challenges to restore strong, sustainable, balanced and inclusive growth.

What is DSSI

It maybe recalled that DSSI was approved in April last year and offered a temporary suspension of “official sector” or government-to-government debt payments to 73 countries. The payments covered are not forgiven but delayed, with a repayment period of five years and a one-year grace period. To receive DSSI relief, countries are required to apply to the International Monetary Fund.

The DSSI was initially in force until the end of 2020. However, due to the continued liquidity pressures, the G20 had agreed to extend the DSSI by six more months. Now the DSSI is expected to run until December 31, 2021.

At Wednesday’s virtual meeting, G20 Finance Ministers and Central Bank Governors discussed updates of the G20 Action Plan in response to Covid-19.

They also discussed supporting the financing needs of the most vulnerable economies, the progress on the international taxation agenda, promoting greener transitions and the pandemic related financial regulation issues.

Vaccination programme

Sitharaman urged all G20 members to ensure equitable access and widespread distribution of vaccines. The Finance Minister shared that India is running an ambitious programme of rapid domestic vaccination and has emerged as a key global producer of vaccines and medical products, especially during the pandemic.

Sitharaman said that India has covered over 87 million citizens in its vaccination drive so far and has supplied over 64 million doses to 84 countries, including 10 million doses as grant. The Finance Minister urged the G20 High Level Independent Panel on Financing the Global Commons for Pandemic Preparedness and Response to draw upon such country experiences.

Sitharaman reflected on the global growth projections and underlined the need for continued coordination amidst the persistence of uncertainties associated with the virus. The Finance Minister said that the G20 Action Plan has served as a good guidance tool and shaping recovery is the mainstay of its current update, an official release said.

Climate change

Noting the discourse in the G20 on climate change, Sitharaman emphasised on the need for progress on commitments made under the Paris Agreement on climate finance and technology transfer. Sitharaman suggested that while channeling flows of international financial institutions into green transitions, it should also be recognised that the immediate challenge, particularly for developing and Low-Income Countries, is to restore growth.