Richer countries should do more to reduce debt of poorer nations, Saudi Arabia's finance minister says

The kingdom is planning a separate initiative to provide additional supplies of Covid-19 vaccines for low-income countries, Mohammed Al Jadaan says

Saudi Arabia’s finance minister Mohammed Al Jadaan. The world’s 20 largest industrialised nations last year agreed on a new joint framework for restructuring government debt to help poorer countries. ReutersShow less

Saudi Arabia on Tuesday called on richer countries to do more to help reduce the debt burden of low-income countries hurt by the pandemic, as the kingdom reviews a separate initiative to procure additional Covid-19 vaccines for poorer nations, its finance minister said.

“If I was in the shoes of one of those 73 [low-income] nations, or even beyond, I would want to see more action from wealthier nations,” Mohammed Al Jadaan, who is also the country’s acting minister of economy and planning, told the World Economic Forum.

“I would like to see debt reduction, I would like to see debt forgiveness,” he said during the online Davos Agenda event.

The group of world's 20 largest industrialised nations last year agreed on a framework to restructure government debt to help poorer countries divert their finances to mitigate the economic impact of the coronavirus pandemic.

It was a step beyond the Debt Service Suspension Initiative (DSSI) approved by G20 finance ministers and central bank governors in April that allowed a time-bound suspension of debt of poorer nations. The agreement "facilitate[s] timely and orderly debt treatments" beyond the mere suspension of more than 70 eligible countries on "case-by-case basis", the G20 said in a November 14 statement.

While more can be done at a sovereign level, any effort to provide relief should not impact private sector creditors, Mr Al Jadaan said.

“We need to make sure that we do not disrupt the market … we do not impose our wills as sovereigns onto private creditors,” he said.

Such a scenario, he said, will lead to the possibility of private sector creditors becoming hesitant in providing funding to these nations in the future.

Saudi Arabia, whose presidency of the rotating G20 presidency ended in November, managed to broker an agreement between sovereign, multilateral and private sector to create the framework, which is also endorsed by the Paris Club of wealthy nations, he said.

"We needed to balance the act, which we [as the G20] did."

G20 finance ministers and central bank governors will reassess whether a further extension of the initiative is needed when they convene at the IMF and the World Bank Spring meeting in April this year.

The G20, which accounts for about 85 per cent global gross domestic product, also pledged to ensure fair distribution of Covid-19 vaccines around the world. The organisation, at the end of its online summit in November, agreed to support "all collaborative efforts" to fight the pandemic, especially the Access to Covid-19 Tools Accelerator (ACT-A) initiative – a global project for vaccines, tests and therapeutics.

Saudi Arabia, Mr Al Jadaan said, is working independently with vaccine companies globally to secure additional supplies of vaccines for indebted nations. The initiative for debt-laden countries is separate from Covax – the vaccines pillar of the ACT-Accelerator that aims to buy and supply 2 billion doses and distribute them fairly by the end of 2021.

“I think everybody realises that if anybody is left behind, we are all at risk”, and that is the driver behind Saudi Arabia’s “serious initiative to provide significant support in vaccination”, he said.

“We are negotiating with a lot of the vaccination companies to provide more vaccines, particularly to low-income countries in this [Middle East] part of the world and Africa,” Mr Al Jadaan said.

Some nations that cannot afford to buy vaccines will “not be able to get enough from Covax quickly, so we are trying to get them something faster”, he said.