VIENNA/NEW YORK/TOKYO -- Top economic officials from the Group of 20 major economies on Wednesday discussed debt relief for low-income countries struggling with their vaccination campaigns, but advanced nations failed to bridge the gap with top creditor China, which has resisted disclosing details of loans.
The virtual meeting of finance ministers and central bankers addressed ways of providing financial support, covering such topics as potentially extending a suspension of bilateral debt service payments through the end of 2021. Officials previously agreed in November on a joint framework for debt restructuring and forgiveness.
But while China signed on to the latter program, it has proven less cooperative than other G-20 members expected. Beijing has been extremely reluctant to disclose the necessary data on its lending to developing nations, asserting, for example, that the 100% state-owned China Development Bank is a "commercial creditor" that cannot be forced to participate in the debt relief program.
A slow recovery in emerging countries risks not only dragging down the overall global economy, but also prolonging the coronavirus pandemic by hindering vaccination efforts.
The International Monetary Fund forecasts overall fiscal deficits in low-income countries expanding to 4.9% of gross domestic product, compared with the 10.4% of advanced nations, suggesting a relative lack of spending power on measures to boost hard-hit economies. The pandemic has created a vicious cycle of shrinking tax revenues and inadequate economic stimulus in poorer nations, making outside support like debt relief vital.
This hinders a vaccination campaign already heavily tilted toward affluent countries. While the U.S. and the U.K. have administered around 50 vaccine doses for every 100 people, developing countries in South America and Asia have given fewer than 10, according to statistics website Our World in Data.
The gap between rich nations and lower-income countries using the United Nations-backed COVAX facility is "becoming more grotesque every day," World Health Organization Director-General Tedros Adhanom Ghebreyesus said in late March.
And with much of the supply chain for raw materials and resources concentrated in these same developing countries, an unabated outbreak could have severe global consequences.
The economic woes of some emerging countries are being compounded by capital flight, particularly with interest rates in the U.S. starting to tick higher. Weakening currencies are adding to the burden of dollar-denominated debt as well.
The IMF estimates that bringing the pandemic under control quickly could lead to an additional $1 trillion in tax revenue for advanced economies thanks to stronger growth, as well as save trillions of dollars more in fiscal support.
"Global cooperation must be stepped up to produce and distribute vaccines to all countries at affordable costs," the organization said.