Question

In: Economics

Critically examine why some countries are unwilling to take advantage of the G20 Sponsored Debt Relief...

Critically examine why some countries are unwilling to take advantage of the G20 Sponsored Debt Relief Arrangement

Solutions

Expert Solution

Debt relief arrangements were announced by the G20 organisations , keeping in focus the vulnerable countries which are facing a much greater hit on the economy with the wake of Covid 19. Countries like pakistan asked for debt relief status , keeping in mind the slowdown economy is facing and the inability of paying back the loans.

The debt relief alternative is a step which might be seen as an opportunity and positive outlook for the vulnerable nations who are unable to pay back their debts. But although this is a positive look on the surface, in long run the repercussions of taking such advantages might not be good. Elaborating this, if the debt payments are relieved for a time being, the chances of indebted nation falling into a debt trap rises, because it is no guarantee that recovery from this pandemic and economic revival will be soon. Also if releif funds are issued on certain interest rates, exclusions from repayment comes with terms and conditions like rising the rate if interest of loan payments , opening up of nation to foreign trade, more specifically to the G20 nations and other bonds and deals which are underlying while making the delay proposals.

In confusion , the loan taking nations try to pay back the money within the allotted time, otherwise might face additional terms and conditions, making these nations a pawn to the shifting politics and diplomacy of powerful nations. Thus nations are avoiding to take relief from debt relief arrangements.


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