G7 Finance Ministers have reaffirmed their commitment towards implementing an official bilateral debt relief for the world's poorest countries amid the Covid-19 pandemic. Covid-19 has exacerbated existing debt vulnerabilities in many low-income countries, highlighting the importance of debt sustainability and transparency to long-term financing for development, the Ministers said in a joint statement released by the US Treasury Department.

 

What

  1. G7 are committed to implementing the Debt Service Suspension Initiative agreed by the G20 and the Paris Club, by suspending official bilateral debt payments for the poorest countries to year-end 2020 and possibly longer, providing those countries fiscal space to fund social, health, and other measures to respond to the pandemic.
  2. Given the importance of private financing for sustainable development, the G7 Ministers welcomed the leadership by the Institute of International Finance (IIF) in coordinating private sector participation, and look forward to follow-up.
  3. The Ministers also said they look to the international financial institutions to step up efforts to provide technical assistance to reduce public debt vulnerabilities, strengthen debt management capacity, and enhance debt reporting practices.
  4. In April, G20 Finance Ministers and central bankers agreed to "support a time-bound suspension of debt service payments for the poorest countries that request forbearance" following a teleconference meeting.

The Group of 7

  1. The G-7 or ‘Group of Seven’ are Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
  2. It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
  3. Canada joined the group in 1976 and the European Union began attending in 1977.
  4. Initially formed as an effort by the US and its allies to discuss economic issues, the G-7 forum has deliberated about several challenges over the decades, such as the oil crashes of the 1970s, the economic changeover of ex-Soviet bloc nations, and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
  5. The G-7 was known as the ‘G-8’ for several years after the original seven were joined by Russia in 1997.
  6. The Group returned to being called G-7 after Russia was expelled as a member in 2014 following the latter’s annexation of the Crimea region of Ukraine.
  7. The G-7 does not have a formal constitution or a fixed headquarters.
  8. The decisions taken by leaders during annual summits are non-binding.