Argentina and Mexico speak out for new debt relief mechanisms

The growth in debt levels globally occurred as "a clear result of the pandemic"

Argentina and Mexico spoke before the Group of 20 (G-20) for analyzing new debt restructuring mechanisms for middle-income countries, in order to avoid a "crisis" in the medium term in the face of the new coronavirus, reported today Wednesday the Mexican Secretary (Minister) of Finance, Arturo Herrera.

On the sidelines of the spring meetings of the International Monetary Fund (IMF) and the World Bank (WB), Argentina and Mexico considered that it is “imperative” to evaluate the impact that the pandemic has had in low- and middle-income countries, according to with a joint statement released by Herrera on his Twitter account.

The document noted that, according to the World Bank, 120 million people fell into extreme poverty in 2020 and an estimated 94 million originated in middle-income countries.

For this reason, Argentina and Mexico indicated that it is essential to consider new mechanisms for middle-income countries with difficulties, with regard to the IMF reserves known as Special Drawing Rights (SDR for its acronym in English).

They also proposed to analyze the creation of a specific fund within the international financial institutions that favors a more orderly restructuring of the debt of middle-income countries that require it.

"This will prevent the health and economic crisis from becoming a debt crisis in the medium term, allowing the vast majority of the world's population not to become the forgotten majority," the statement explained.

The growth in debt levels globally occurred as "a clear result of the pandemic," through an increase in spending to provide economic stimulus or improve health systems, as well as a substantial decrease in income, said the joint declaration.

The 2021 Spring Meetings are held virtually between April 5 and 11, and bring together authorities from central banks, ministers of finance and development, private sector executives, representatives of civil society organizations and members of academic circles. / Xinhua

 

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