Hedge Funds, China Should Give More Debt Relief, World Bank Says

(Bloomberg) -- The Group of 20 nations should extend debt relief to the poorest nations through the end of next year, and hedge funds and China should participate more in the efforts, World Bank President David Malpass said.

The recession in the developing world with the exception of China is worse than expected, and the G-20’s Debt Service Suspension Initiative that began in May is only providing shallow relief due to the lack of full participation by the Asian nation and private creditors, Malpass said Monday in an interview on Bloomberg Television with Jonathan Ferro.

“We need to do much more,” Malpass said. “The commercial creditors were supposed to join that initiative as well, that means banks and hedge funds, for example. Unfortunately, they didn’t, and even the bilateral official creditors didn’t fully participate, so the savings for these countries, we’re talking about the poorest countries in the world, they’re still paying their debts in some cases, and so that I think should be broadened.”

The assessment comes as the World Bank and International Monetary Fund hold their annual meetings this week, moving to a virtual format due to the Covid-19 pandemic that has cost more than 1 million lives and resulted in a global recession. Growing debt vulnerabilities are expected to be a key theme at the gathering.

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