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G20: 46 Countries Applied for Relief Under DSSI

The G20 concluded the International Financial Architecture Working Group meetings for September 2020, where it discussed updates on DSSI. Photo: Twitter account of G20 Saudi Arabia
The G20 concluded the International Financial Architecture Working Group meetings for September 2020, where it discussed updates on DSSI. Photo: Twitter account of G20 Saudi Arabia
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G20: 46 Countries Applied for Relief Under DSSI

The G20 concluded the International Financial Architecture Working Group meetings for September 2020, where it discussed updates on DSSI. Photo: Twitter account of G20 Saudi Arabia
The G20 concluded the International Financial Architecture Working Group meetings for September 2020, where it discussed updates on DSSI. Photo: Twitter account of G20 Saudi Arabia

The Group of 20 major economies on Friday said they are looking at structural approaches to secure longer-term financing for developing countries, including development of domestic capital markets and work to catalyze private sector investment.

In a statement, the Saudi G20 secretariat said 46 countries had applied for relief under the Debt Service Suspension Initiative (DSSI) approved by G20 members in April that offers a freeze in official bilateral debt payments to free up funds for countries to spend on fighting the coronavirus pandemic.

“All major official bilateral creditors remain committed to suspending due debt service payments to the most vulnerable countries in these challenging times," said Bandr Alhomaly, the Saudi G20 Presidency IFA WG policy lead.

“These commitments are complemented by the support of the IMF and Multilateral Development Banks to DSSI-eligible countries,” a statement issued by the Saudi G20 Secretariat quoted him as saying.

The initiative provides an estimated $14 billion of immediate liquidity relief by bilateral official creditors alone in 2020, said the statement.

The G20 is also working with international organizations to complement these efforts by committing USD75 billion for DSSI-eligible countries between April-December 2020 alone, part of their USD230 billion commitment for emerging and low income countries as a response to the pandemic, it said.

“In addition, since late March, the IMF has provided debt relief to 28 DSSI-eligible countries and also provided financial assistance of more than USD88 billion to 81 countries, 53 of which are DSSI-eligible countries facing the economic impact of COVID-19,” it added.

“As we begin to look towards a stronger, more resilient recovery, the G20 is exploring structural approaches to secure longer-term financing to developing countries, including through the development of domestic capital markets and crowding-in private sector investments,” Alhomaly said.

“This comes alongside efforts to better manage risks from excessive capital flow volatility, while unlocking greater gains from enhanced cooperation between development partners,” he added.

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Yemen’s Fragile Economy Feels the Heat of Iran-Israel Conflict

Fears mount over the impact of military escalation on the Yemeni currency, which has recently seen a rapid decline (AFP). 
Fears mount over the impact of military escalation on the Yemeni currency, which has recently seen a rapid decline (AFP). 
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Yemen’s Fragile Economy Feels the Heat of Iran-Israel Conflict

Fears mount over the impact of military escalation on the Yemeni currency, which has recently seen a rapid decline (AFP). 
Fears mount over the impact of military escalation on the Yemeni currency, which has recently seen a rapid decline (AFP). 

The ripple effects of the escalating conflict between Iran and Israel are being felt in Yemen’s fragile economy. The already-depreciated Yemeni rial has fallen further, fuel prices have surged following a government decision, and fears of wider inflation loom over one of the region’s most vulnerable economies.

Last week, the exchange rate for the US dollar crossed 2,750 Yemeni rials before slightly retreating. Economists warn the rial will likely continue to weaken amid broader regional instability. In response, Prime Minister Salem bin Braik announced an emergency 100-day plan to stabilize the economy and ensure basic state obligations, including public sector salaries.

The government also introduced new fuel pricing, raising costs by up to $1 per 20-liter container of gasoline and diesel. This marks the fourth fuel price hike this year, compounding pressure on Yemen’s already burdened consumers.

With Yemen importing over 95% of its goods, any increase in global shipping costs or insurance premiums immediately impacts domestic prices.

Economist Rashid Al-Ansi explained to Asharq Al-Awsat that the cost of food, fuel, and other essential goods is rising due to the weakened currency and regional tensions. Unlike neighboring countries, he added, Yemen lacks the fiscal space and policy flexibility to absorb such shocks.

Adding to the strain, foreign currency reserves are being depleted as locals rush to convert their savings into dollars or gold amid fears of an open war between Israel and Iran. This has raised concerns of further rial depreciation and capital flight, according to economist Fares Al-Najjar.

Al-Najjar also warned that remittance flows - Yemen’s main source of foreign currency - may decline due to global uncertainty, reducing the central bank’s ability to stabilize the market. The government is already struggling to fund basic services, including electricity in Aden and water supply in Taiz.

Experts are particularly concerned about potential disruption to maritime trade. If military tensions spill over into the Red Sea or Gulf of Aden, Yemen’s surrounding waters could be labeled “high-risk zones,” driving shipping and insurance costs up by as much as 300%. This would cripple import flows and make oil exports - Yemen’s last lifeline for foreign currency - nearly impossible.