World leaders met on finance for development and debt management to cope with COVID-19 fallout
Vientiane, 30 March 2021 – Since the onset of the global pandemic, the world has been teetering on the brink of a global debt crisis. Six countries have defaulted. Lao PDR is among 42 that have had their credit ratings downgraded, and face challenges securing sufficient market access to refinance debts.
With many countries struggling to overcome the human and economic devastation from COVID-19, UN Secretary-General António Guterres convened a meeting of world leaders on Monday 29 March to urge the international community to take additional and urgent action to ensure a robust recovery.
The high-level virtual meeting organized by the Secretary-General together with the Prime Minister of Canada Justin Trudeau and the Prime Minister of Jamaica Andrew Holness served to underscore the urgency of the need for bolder and concrete action to provide liquidity and address debt vulnerability in developing countries.
“We are on the verge of a debt crisis. Six countries have already defaulted. One-third of emerging market economies are at high risk of fiscal crisis. And the situation is even worse for least developed and low-income countries,” said United Nations Secretary-General António Guterres.
Reflecting on the importance of this for Lao PDR, Ms. Sara Sekkenes, the UN Resident Coordinator to Lao PDR, stressed “finding ways to ensure adequate financing for the policy priorities set out in the 9th National Socio-Economic Development Plan, in this incredibly challenging financial environment, will be one of the major determinants of development progress over the coming 5 years”.
G20 initiatives so far remain insufficient to meet the needs of the developing world and to spearhead a global recovery. The Debt Service Suspension Initiative and the Common Framework have only partially addressed the debt standstill and targeted debt relief phases.
In response, the Secretary-General is calling for a reform of the international debt architecture that can withstand crises and avoid lost decades. It would be based on agreed principles: the need for transparency and debt management; sustainability; responsible borrowing and lending; and shared responsibility and fair burden sharing among creditors and between debtors and creditors.
A policy brief on liquidity and debt solutions and the Secretary-General’s call to action is available here. The Secretary-General's opening remarks to the High-Level Event on Debt and Liquidity can be found here.