Mexico and Argentina call for debt relief for middle income nations

The statement cited World Bank data that 94 million people fell back into extreme poverty in middle-income countries globally in 2020. The coronavirus crisis has ravaged Argentina's already ailing economy, complicating efforts to make good on its obligations.

Mexico and Argentina on Wednesday urged greater debt relief for middle income countries, saying the proposal could prevent a debt crisis emerging on the back of the pandemic.

The call for more help, made in a joint statement by two nations led by leftist leaders, comes as Argentina scrambles to renegotiate the roughly $45 billion the country owes to the International Monetary Fund (IMF). During the IMF and World Bank Spring Meetings, the two countries said middle income nations should have more access to IMF reserves known as Special Drawing Rights and the creation of specific fund within international institutions to favor orderly debt restructuring or improved financing conditions in middle income countries.

"This will prevent the health and economic crisis from turning into a debt crisis in the medium term," said the joint statement by the governments of Latin America's two largest economies. The statement cited World Bank data that 94 million people fell back into extreme poverty in middle-income countries globally in 2020.

The coronavirus crisis has ravaged Argentina's already ailing economy, complicating efforts to make good on its obligations. Mexico has also seen its long-term borrowing costs rise during the pandemic, while its debt-to-GDP ratio has risen from 44.8% in 2019 to 52.3% last year.