Print Friendly, PDF & Email

G7 backs extension of debt freeze

Topics Covered: Important International institutions, agencies and fora, their structure, mandate.

G7 backs extension of debt freeze:


Context:

G7 finance ministers has backed an extension of a G20 bilateral debt relief initiative for the world’s poorest countries, but said it must be revised to address shortcomings hindering implementation.

About the G20 bilateral debt relief initiative:

G20 nations, in April this year, agreed to freeze bilateral government loan repayments for low-income countries until the end of the year as part of a plan to tackle the health and economic crises triggered by the coronavirus pandemic and prevent an emerging markets debt crunch.

  • The group also called on private creditors “to participate in the initiative on comparable terms” and asked multilateral development banks, such as the IMF and World Bank, “to further explore the options for the suspension of debt service payments over the suspension period”.

What is G7?

The G7, originally G8, was set up in 1975 as an informal forum bringing together the leaders of the world’s leading industrial nations.

  • The summit gathers leaders from the European Union (EU) and the following countries: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

g20_g8_g7

How did G7 become G8?

  • Russia was formally inducted as a member in the group in 1998, which led G7 to become G8.
  • However, Russian President Vladimir Putin’s condemnable act of moving Russian troops into eastern Ukraine and conquering Crimea in 2014 drew heavy criticism from the other G8 nations.
  • The other nations of the group decided to suspend Russia from the G8 as a consequence of its actions and the group became G7 again in 2014.

InstaLinks:

Prelims Link:

  1. G7 vs G8 vs G20.
  2. Geographical location of member countries.

Mains Link:

Discuss the relevance of G7 countries today. What are the reforms necessary to make the grouping more effective?

Sources: the Hindu.