Top economic officials from the Group of 20 major economies met on Wednesday to negotiate debt relief for low-income countries struggling to fund vaccination programs, but advanced nations were unable to close the gap with top creditor China, which has refused to reveal loan information.
The virtual meeting of finance ministers and central bankers focused on ways to provide financial assistance, including the possibility of extending the suspension of bilateral debt service payments until the end of 2021.
Officials agreed on a collaborative agreement for debt reduction and forgiveness in November, reports Nikkei Asia.
However, after signing on to the latter initiative, China has been less cooperative than other G-20 participants had expected.
Beijing has been adamant about withholding information on its loans to developing countries, claiming, for example, that the China Development Bank, which is 100 percent state-owned, is a "private borrower" who cannot be pressured to engage in debt relief scheme.
Slow economic recovery in emerging markets risks not only dragging down the global economy, but also prolonging the coronavirus pandemic by obstructing vaccine efforts.
Overall fiscal deficits in low-income countries are expected to rise to 4.9 percent of GDP, compared to 10.4 percent in industrialized countries, according to the International Monetary Fund, indicating a relative lack of spending power on interventions to support hard-hit economies.
In developing countries, the pandemic has generated a vicious cycle of declining tax revenues and insufficient economic stimulus, necessitating foreign assistance such as debt relief.
This hinders a vaccination campaign already heavily tilted toward affluent countries. While the US and the UK have administered around 50 vaccine doses for every 100 people, developing countries in South America and Asia have given fewer than 10, according to statistics website Our World in Data.
The gap between rich nations and lower-income countries using the United Nations-backed COVAX facility is "becoming more grotesque every day," World Health Organization Director-General Tedros Adhanom Ghebreyesus said in late March.
And with much of the supply chain for raw materials and resources concentrated in these same developing countries, an unabated outbreak could have severe global consequences.
The economic woes of some emerging countries are being compounded by capital flight, particularly with interest rates in the US starting to tick higher. Weakening currencies are adding to the burden of dollar-denominated debt as well.
The IMF estimates that bringing the pandemic under control quickly could lead to an additional $1 trillion in tax revenue for advanced economies thanks to stronger growth, as well as save trillions of dollars more in fiscal support.
"Global cooperation must be stepped up to produce and distribute vaccines to all countries at affordable costs," the organization said.