The newly appointed director-general of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, has recommended a multilateral debt relief for low-income countries, arguing that such a step will promote investment and trade world-wide.
She made her appeal on Monday, 29 March, during a meeting with heads of state and government, which focused on International Debt Architecture and Liquidity.
Supporting her recommendation, Dr Okonjo-Iweala, former Nigeria’s finance minister, narrated her country’s economy boomed between 2004 and 2005 when it enjoyed debt relief from its creditors.
As Nigeria’s finance minister, Mrs Okonjo-Iweala negotiated with the Paris Club to grant debt relief to Nigeria and reduce its debt to $30 billion. The WTO boss believes that act boosted her country’s economy and created employment and growth in Nigeria.
Dr Okonjo-Iweala insisted that the developed countries should take steps to grant debt relief to low-income countries, especially now that the corona pandemic has devasted the economies of many third world countries.
She argued that previous debt relief granted to some developing countries helped them for more than two decades. However, unforeseen circumstances such as food crises, climate change, and epidemics affected the economies and effectively halted those countries’ growth.
“Multiple crises, from the financial, economic and food crises of 2008-2009, to localized impacts of climate change, epidemics and now COVID-19, have left many poor countries and even emerging markets in debt distress, with little fiscal space to cope or to finance the SDGs post-COVID,” she lamented.
Dr Okonjo-Iweala believes that creating a conducive trade treaty between the rich and emerging countries would help minimize debt pressures on developing countries and encourage economic growth amongst low-income countries.
The WTO chief called on the international financial institutions such as the world bank and the International Monetary fund (IMF) to play a significant role by giving financial assistance to countries with sustainable debts and fiscal discipline, which she believes will encourage investment, trade, growth and employment.