sitharaman: Sitharaman highlights rising debt vulnerabilities in developing countries at G20, seeks multilateral coordination

Finance Minister Nirmala Sitharaman on Friday highlighted rising debt vulnerabilities in many developing countries and sought views from G20 member nations on ‘multilateral coordination’ for managing the burden. Speaking at inaugural session of the G20 finance ministers and central bank governors (FMCBG) meeting, Sitharaman also sought views on how multilateral development banks, like the IMF and World Bank, can be strengthened to address shared global challenges of the 21st century, while maintaining a focus on Sustainable Development Goals (SDGs) and poverty eradication.

The discussions of the first session of G20 FMCBG meeting focused on issues relating to international financial architecture, sustainable finance and infrastructure.

“FM highlighted the rising #DebtVulnerbilities in many vulnerable countries and sought views of the #G20 members on #MultilateralCoordination stating that managing global debt vulnerabilities would be crucial for the world economy,” the finance ministry tweeted.

In December last year, World Bank President David Malpass had said the world’s poorest countries owed USD 62 billion in annual debt service, a 35 per cent growth over USD 46 billion in 2021, triggering higher risk of defaults.

Malpass had said the low-income countries are at high risk of debt distress or already in it and debt crises are also spreading to middle-income countries.

Under the G20 Presidency, India has been pressing for ways to tackle the aggravated debt vulnerabilities facing developing nations mainly on account of the continuing geopolitical tensions and the pandemic.

It is feared that if left unaddressed, the mounting debt vulnerabilities of developing nations might trigger global recession and push millions to extreme poverty. In her speech, Sitharaman also invited views of the G20 nations on policy initiatives that can be instrumental in enabling financing for SDGs and ways for mobilisation of timely and adequate resources for climate finance.

The minister also spoke regarding India’s priority of financing cities of tomorrow and sought to explore the views of the 20 developed and developing economies on domestic policy experiences with respect to financing inclusive, resilient and sustainable cities of tomorrow.