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Debt Relief For Poor Countries Not As Simple As It Sounds: Analysts

Charity groups estimate too that a wider group of 121 low- and middle-income governments spent more last year servicing their external debts than on their public health systems, now at breaking point, making the moral case for relief impossible to ignore.

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Some high-profile sovereign creditors are signalling a tentative willingness to help poorer countries with debt relief during the coronavirus pandemic - but many also caution that it won't be as simple as it sounds.

Last week's agreement by G20 governments to freeze as many as 77 poorer nations' debt payments for the rest of the year came with a warning from the head of the World Bank that private investors shouldn't expect a "free ride".

All are fully aware of the problem. Defaults are already starting and across Africa, where the World Health Organisation is warning of up to 10 million coronavirus cases within six months, countries are facing a combined $44 billion debt-servicing bill this year alone.

Charity groups estimate too that a wider group of 121 low- and middle-income governments spent more last year servicing their external debts than on their public health systems, now at breaking point, making the moral case for relief impossible to ignore.

"There is clearly a willingness from (private sector)creditors to be constructive, to give some breathing room," said distressed debt veteran Hans Humes of Greylock Capital.

Humes was part of Heavily Indebted Poor Country initiatives in the past, and he is now involved in an Institute of International Finance (IIF) group aiming to coordinate the private sector's support effort.

(Reuters)


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