| 15 April 2024, Monday |

IMF extends debt relief of $115m for 25 low-income countries

The executive board of the International Monetary Fund has granted the extension of $115 million in debt relief to 25 qualifying low-income countries from January 11 to April 13 of next year in an effort to assist them weather pandemic-induced headwinds.

The approval of the fifth and final tranche of debt service relief from the Catastrophe Containment and Relief Trust (CCRT) takes the total two-year Covid-related debt relief since April 2020 to $964 million, according to a statement from the Washington-based lender. The four prior tranches were authorized on April 13, 2020, October 2, 2020, and April 1 and October 6, this year, respectively.

“This helps free up precious financial resources for critical health, social, and economic support to alleviate the effects of the Covid-19 epidemic,” according to the charity.

According to the UN Conference on Trade and Development, the harm caused by the Covid-19 epidemic has been bigger than that caused by the 2008-2009 global financial crisis, particularly in Africa and South Asia. The fund stated in September that poor nations facing the possibility of a “lost decade” due to an unequal global economic recovery require renewed international help.

he recovery from the Covid-19 epidemic remains “hobbled,” and the global economy might suffer losses of up to $5.3 trillion over the next five years if the vaccination divide is not narrowed, according to the IMF.

Last year, global debt reached $226 trillion, the highest one-year increase since World War II. According to the latest update to the lender’s Global Debt Database, global debt increased by 28 percentage points to 256 percent of GDP in 2020.

Kristalina Georgieva, the IMF’s managing director, initiated an urgent fundraising push in March 2020, at the outset of the epidemic, to generate $1.4 billion in grants to enable the CCRT give debt relief for up to a maximum of two years, while leaving the trust adequately financed for future requirements.

Donors have donated a total of $852 million in donations thus far. According to the IMF, these contributors included the EU, the United Kingdom, Japan, Germany, France, the Netherlands, Spain, Switzerland, Norway, Singapore, Greece, China, Mexico, the Philippines, Sweden, Bulgaria, Luxembourg, Malta, and Indonesia.

According to the fund’s executive directors, CCRT debt relief awards “have enabled its poorest and most vulnerable members free up resources to combat the epidemic and its ramifications.”

They did, however, state that total grant commitments obtained to date fall short of the cost of the entire two-year Covid-related debt payment relief and fall far short of the $1.14 billion fundraising objective.

The approval of the fifth tranche will significantly lower the CCRT’s pre-Covid cash buffer and may limit its ability to give assistance in future situations, according to the board of directors. However, given the pandemic’s ongoing human and economic toll, the fund believes there is a compelling argument for clearance of the tranche.

According to the statement, the directors also agreed on the critical necessity for sustained fundraising efforts to address the CCRT’s underfunding.

  • The National News