Friday, December 3, 2021

IMF extends debt relief for 28 low-income countries

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The Executive Board of the International Monetary Fund, IMF, has approved the third tranche of grants for debt service relief for 28 member countries under the Catastrophe Containment and Relief Trust, CCRT.

This is according to a statement issued by the fund in Washington D.C. on Monday.

It said that the approval followed two prior tranches approved on April 13 and Oct. 2, 2020.

The CCRT provides grants for debt service relief to countries hit by catastrophic events, including public health disasters such as COVID-19.

According to the fund, the approval enables the disbursement of grants from the CCRT for payment of all eligible debt service falling due to the IMF from its poorest and most vulnerable members from April 14 to Oct. 15.

It added that the estimated amount to be disbursed was 238 million dollars.

“This tranche of grants for debt service relief will continue to help free up scarce financial resources for vital emergency health, social and economic support to mitigate the impact of the COVID-19 pandemic.

“Subject to the availability of sufficient resources in the CCRT, debt service relief could be provided for the remaining period through from Oct. 16, 2021 to April 13, 2022 amounting to a total of about 964 million dollars.”

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The beneficiaries of the third CCRT tranche are Afghanistan, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Ethiopia, The Gambia, Guinea and Guinea-Bissau.

Others are Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.

The IMF said that in March 2020, Managing Director, Kristalina Georgieva launched an urgent fund raising effort to raise 1.4 billion dollars in grants for the CCRT.

This, it said, would enable the CCRT to provide financial assistance for relief on debt service for up to a maximum of two years, while leaving the CCRT adequately funded for future needs.

It added that thus far, donors had pledged contributions totalling about 774 million dollars, including from the European Union, the United Kingdom, Japan, Germany, France, the Netherlands, Switzerland, Norway, Singapore, China, Mexico, Philippines, Sweden, Bulgaria, Luxembourg and Malta.

Meanwhile, the IMF, on Monday received the European Union (EU)’s contribution of 199 million dollars to the CCRT.

This disbursement is part of the EU’s overall contribution of 215 million dollars to the CCRT.

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It finances grants for the third tranche of CCRT debt service relief that was approved by the IMF´s executive board.

“The EU stands ready to disburse its remaining grant contribution in support of additional debt service relief in the context of potential future CCRT tranches.

“With this contribution, the EU, together with the EU institutions and its member states, has committed more than half of the current CCRT pledges.”

The fund said that together with the third tranche, the IMF had provided about 736 million dollars in grants for debt relief to all 29 CCRT-eligible members since the pandemic began in early 2020.

It added that the purpose of the debt relief initiative under the CCRT was to free up resources to meet exceptional balance of payments needs created by the disaster rather than having to allocate those resources to debt service.

Georgieva said that the EU’s generous contribution of 215 million dollars was critical to help the world’s most vulnerable countries cope with the impact of the COVID-19 crisis and continue providing health care, economic and social support for their people.

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“I am grateful to the EU and its member states for their support and strong partnership.

“I urge other countries to contribute to the CCRT so we can in turn support our most vulnerable member countries.”

Jutta Urpilainen, the European Commissioner for International Partnerships, said that through the contribution to the CCRT, Team Europe continues to stand in solidarity with its most vulnerable partners.

“In this difficult period, the resources freed up can provide social services for the most vulnerable people, such as access to essential healthcare and education for young people, including girls.

“Team Europe’s Global Recovery Initiative is working to provide debt relief and sustainable investment for the Sustainable Development Goals.”

The CCRT provides grants to pay debt service owed to the IMF by eligible low-income member countries that are hit by the most catastrophic of natural disasters or battling public health disasters—such as the COVID-19 pandemic.

CCRT-eligible countries are those eligible for concessional borrowing through the IMF’s Poverty Reduction and Growth Trust (PRGT) and whose annual per capita gross national income level is below 1,175 dollars.

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