December 6th. Argentina’s Buenos Aires Economic News Network reported on December 1 that the United Nations warned that the novel coronavirus could bring a huge debt crisis to Latin America.
UN Secretary-General Antonio Guterres warned on November 30 that Latin America could suffer a “great crisis” of sovereign debt in 2021 because countries must increase public spending in response to the COVID-19 epidemic.
“It is expected that there will be a huge sovereign debt crisis in the coming year,” Guterres said in a network meeting with Central American Heads of State and Government.
According to the report, Guterres asked multilateral financial institutions such as the International Monetary Fund and the World Bank, as well as the Group of Twenty (G20) to provide “support”. Guterres hopes that the above-mentioned institutions will agree to postpone debt repayment until the end of 2021.
The report pointed out that in mid-November, the G20 passed a plan aimed at adjusting the debt of several poor countries affected by the COVID-19 epidemic. The plan sets common rules for all members to reduce or refinance the debt of these countries, although the judgment is “depending on the circumstances”.
The report also pointed out that the moratorium on external debt payments to G20 countries was extended for six months last month.
The IMF estimates that Latin America’s GDP will contract by 8.1% in 2020, compared with the June forecast of 9.4%. The IMF said that although expectations have improved, some countries hit hard by the COVID-19 epidemic will experience a “severe recession”.
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