In the same week as Economy Minister Martín Guzmán’s “final offer” to Argentina’s creditors, Pakistani Prime Minister Imran Khan has appealed for a “Global Initiative on Debt Relief,” underlining that a global recession worse than the Great Depression was certain in the wake of the Covid pandemic.
The initiative plans to bring together all the multilateral stakehol- ders to promote a co-ordinated health and economic response with an emphasis on laying the groundwork for “urgent debt relief to the developing countries.”
Imran Khan highlighted that his own government had already provided a US$8-billion stimulus package to help the most vulnerable Pakistanis but pointed out the fundamental need of debt relief and restructuring for developing countries in order to give them the fiscal space to manage and recover from the unfolding crisis.
The United Nations also called this week for the creation of a global authority to help implement the temporary suspension of debt obli- gations from developing countries during the coronavirus pandemic.
The proposal will enable private creditors to join the debt payments pause and allow countries use resources to fight the new illness, said Stephanie Blankenburg, head of debt and development finance at UNCTAD, the UN’s trade and development agency.
The authority should be initially established as an autonomous organization like the International Atomic Energy Agency was in the 1950s before it is recognised by the entire United Nations, Blankenburg said. that require it,” she said.
Argentina’s proposal for a three-year debt payment moratorium and steep cuts in interest rates should be taken as an “example in future sovereign restructuring, Blankenburg said.