The Group of 20 major economies' debt relief initiative for the world's poorest countries has made good progress, but additional relief and greater participation by private sector creditors are needed, World Bank President David Malpass said Monday.
Malpass told Reuters in an interview that 35 of 73 eligible countries were participating in the G-20 debt relief initiative, which will freeze debt service payments on official bilateral debt through year-end, and more had expressed interest.
The G-20's Debt Service Suspension Initiative (DSSI) will free up $12 billion in funds that countries can use to deal with the health and economic strains caused by the coronavirus, a new World Bank database shows.
Malpass said the pandemic had clearly delivered a "very serious, long-lasting setback" to the global economy that was hitting the poorest countries especially hard.
The debt relief agreed on by G-20 members and the Paris Club of official creditors in April was helping the poorest countries, but further steps would be needed to prevent the economic crisis from widening rates of poverty, he said.
He did not endorse calls by African countries and others for an extension of the debt holiday through 2022 and cancellation of some debts but said further steps would be needed.
"We need to look for ways to provide additional debt relief for the poorest countries and then look at the broader situation facing developing countries," he said.
He also urged the private sector to boost its participation.
"It doesn't really make sense for the commercial creditors to continue taking in, requiring and legally enforcing payments from the ... poorest countries that have been struck by both the pandemic and the deepest economic recessions since World War Two," he said.
Some countries have been reluctant to seek such relief out of concern it could harm their credit ratings and access to international capital markets.
Increased transparency about debt levels and creditors could pave the way for increased investment to promote future growth, he said.