Mexican president calls on rich countries to lessen debt for poorer nations

© Reuters. FILE PHOTO: Mexico’s President Andres Manuel Lopez Obrador gestures during a news conference at National Palace in downtown Mexico City

MEXICO CITY (Reuters) – Mexican President Andres Manuel Lopez Obrador on Sunday called on the Group of 20 (G20) major economies to improve external debt conditions for poor and middle-income countries, as the global economy suffers a recession from the coronavirus crisis.

The leftist president has warned against taking on debt and bailing out companies, even as Mexico’s economy is set to contract 10% this year, its worst slump since the Great Depression.

“Our proposal consists in … making a reality the commitment to remove sums of debt and debt-servicing to the poor nations of the world,” Lopez Obrador said in a video as part of the G20 summit.

He also urged fellow leaders to “guarantee that middle-income countries can access credit at interest rates equivalent to the current ones in developed countries.”

On Saturday, the World Bank president had warned G20 leaders that failing to provide more permanent debt relief could lead to increased poverty and a repeat of the disorderly defaults of the 1980s.

With interest rates in the United States and Europe already close to zero, Lopez Obrador is likely aiming to rally support for extending loans on similarly favorable terms for developing countries, said economist Jose Luis de la Cruz, director of the Institute for Industrial Development and Economic Growth.

Lopez Obrador also said Mexico’s economy is meeting the government’s expectation of V-shaped recovery, and projected that by next March the number of formal jobs will bounce back to 20.5 million, the amount before the pandemic hit.

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