In this file photo taken on July 17, 2019, US Treasury Secretary of State Steven Mnuchin (L) listens to World Bank Group President David Malpass (R) while attending a working session during the G7 Finance Ministers and Central Bank Governors' meeting in Chantilly. (ERIC PIERMONT / AFP)

WASHINGTON - Finance ministers of Group of Seven (G7) industrialized nations on Wednesday reaffirmed their commitment to implementing official bilateral debt relief for the world's poorest countries through year-end and possibly longer.

COVID-19 has exacerbated existing debt vulnerabilities in many low-income countries, highlighting the importance of debt sustainability. 

G7 finance ministers' joint statement

"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 finance ministers said in a joint statement released by the US Treasury Department.

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"We 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," the officials said.

Given the importance of private financing for sustainable development, the G7 ministers welcome leadership by the Institute of International Finance (IIF) in coordinating private sector participation, and look forward to follow-up, according to the statement.

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The G7 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.

"I welcome the continued strong support among the G7 for helping low-income countries address the impacts of COVID-19, including through participation in the Debt Service Suspension Initiative," US Treasury Secretary Steven Mnuchin said in a separate statement, adding the ministers agreed to convene on a regular basis to work together on critical economic issues to restore their respective economies.

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"I look forward to making significant progress to review with the G20 Ministers at the meeting in July," he said.

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.

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