The International Monetary Fund on Monday announced immediate debt relief for 25 poor countries to help them free up funds to fight the coronavirus pandemic. “This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts,” IMF Managing Director Kristalina Georgieva said in a statement.
I am very pleased that the IMF’s Executive Board just agreed to provide immediate debt service relief to 25 of the poorest countries for the next 6 months. This will provide them space to reorient funding towards critical areas to address #COVID19. https://t.co/Qvn996Bzbc pic.twitter.com/8eKNoRscKt
— Kristalina Georgieva (@KGeorgieva) April 13, 2020
The IMF board approved the debt relief for the countries, nearly all in Africa, but also Afghanistan, Yemen, Nepal and Haiti. The fund together with the World Bank have called for rich nations to stop collecting debt payments from poor countries from May 1 through June 2021.
The debt relief will be funded by the IMF’s Catastrophe Containment and Relief Trust (CCRT), which was first set up to combat the West Africa Ebola outbreak in 2015 and has been repurposed to help countries fend off COVID-19.
The fund currently has $500 million, with Japan, Britain, China and the Netherlands among its main contributors. “I urge other donors to help us replenish the trust’s resources and boost further our ability to provide additional debt service relief for a full two years to our poorest member countries,” Georgieva said.
Last week, the World bank said it would roll out $160 billion in emergency aid over 15 months to help countries stricken by the virus, including $14 billion in debt repayments from 76 poor countries to other governments.
The International Monetary Fund said on Thursday the Coronavirus pandemic will trigger the worst economic fallout in 2020 since the 1930s Great Depression, with only a partial recovery seen in 2021.
Speaking on the social and economic impact of the coronavirus IMF Managing Director Kristalina Georgieva said even though governments had already undertaken fiscal stimulus measures of $8 trillion, more would likely be needed. She said the crisis would hit emerging markets and developing countries hardest of all, which would then need hundreds of billions of dollars in foreign aid.
“Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020,” she said on Thursday. “Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year.”
If the pandemic faded in the second half of the year, the IMF expected a partial recovery in 2021, Georgieva said, but she warned the situation could also get worse. “I stress there is tremendous uncertainty about the outlook: it could get worse depending on many variable factors, including the duration of the pandemic,” she said.