IMF Establishes a Catastrophe Containment and Relief Trust to Enhance Support for Eligible Low Income Countries Hit by Public Health DisastersPress Release No. 15/34
February 5, 2015
The Ebola epidemic in parts of West Africa is a humanitarian disaster that has drawn the attention of the international community to the threat posed by the rapid spread of life-threatening infectious diseases, both within and across international boundaries.
On February 4, 2015, the Executive Board of the International Monetary Fund (IMF) met to consider how the Fund could better support low-income countries hit by such public health disasters. This would take into account both the humanitarian case for providing such support and the wider international interest in supporting vigorous action to contain and halt a potential regional or global pandemic at the earliest possible stage.
To help meet these objectives, the Board approved the establishment of a new Catastrophe Containment and Relief (CCR) Trust, as a vehicle to provide exceptional support to countries confronting major natural disasters, including life-threatening, fast-spreading epidemics but also other types of catastrophic disasters, such as massive earthquakes. For eligible countries confronting epidemics that meet specified criteria, the IMF would use CCR trust fund resources to provide grants as a supplement to its conventional loan support. The grants would be used to pay off future debt service payments, thus reducing the country’s debt burden and freeing up resources to tackle relief and recovery challenges.
Subject to Board approval of requests from the individual countries, it is expected that the CCR trust would provide grants-for-debt relief of close to $100 million for the three countries affected by Ebola in West Africa –Liberia, Sierra Leone, and Guinea. These funds would come in addition to the $130 million of assistance provided in September 2014 and to a second round of new concessional loans amounting to about $160 million to be considered soon by the Executive Board.
At the conclusion of the Executive Board meeting on the CCR, IMF Managing Director Christine Lagarde stated:“I welcome the establishment of the Catastrophe Containment Relief Trust. It aims at enhancing our support to the countries in Africa hit by Ebola, as well as other low income countries that may be affected by public health disasters in the future. This is a strong example of the IMF demonstrating flexibility and innovation in responding to the needs of our global membership.”
The primary tool through which the Fund supports low income countries confronting natural disasters is through the speedy provision of its interest-free loans to the affected countries, whether by expanding the amounts being provided under a pre-existing Fund financial program with the member or by disbursing funds under the Rapid Credit Facility (RCF).
In their November 2014 meeting in Brisbane, the G-20 called on the Bretton Woods Institutions to continue their strong support to countries severely affected by the Ebola outbreak through a combination of concessional loans, debt relief and grants, and asked the institutions to explore new, flexible mechanisms to address the economic effects of future comparable crises. The CCR Trust is the Fund’s response to that call. It replaces the Post-Catastrophe Debt Relief (PCDR) Trust established on June 25, 2010 in the wake of a massive earthquake in Haiti, and expands the circumstances under which the Fund can provide exceptional assistance to its low income members to include public health disasters.
Through the new instrument, the Fund is able to quickly and flexibly adjust its policies in the face of unexpected international developments, including pandemics, to serve the needs of its membership, especially the most vulnerable.