Press Release: IMF Establishes a Catastrophe Containment and Relief Trust to Enhance Support for Eligible Low Income Countries Hit by Public Health Disasters
IMF News, February 13, 2015
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- Published: February 13, 2015
Overview
- The IMF Executive Board approved the establishment of the Catastrophe Containment and Relief (CCR) Trust to provide grants for debt relief in cases of public health disasters and other catastrophic disasters affecting eligible low-income members.
- The CCR Trust replaces the Post-Catastrophe Debt Relief (PCDR) Trust (established June 25, 2010) and expands circumstances for exceptional assistance to include public health disasters such as pandemics.
Immediate support for Ebola-affected countries
- The CCR will provide grants for debt relief totaling $100 million for the three countries affected by Ebola in West Africa—Liberia, Sierra Leone, and Guinea.
- This $100 million support comes in addition to:
- $130 million of assistance provided in September 2014, and
- a second round of new concessional loans amounting to about $160 million to be considered soon by the Executive Board.
CCR Trust design and operational features
- Two windows under the CCR Trust:
- Post-Catastrophe Relief window: replicates the design and functions of the PCDR Trust.
- Catastrophe Containment window: supports countries hit by public health disasters.
- Eligibility:
- Assistance limited to the poorest and most vulnerable PRGT-eligible countries, consistent with existing PCDR Trust eligibility criteria.
- Access to the Catastrophe Containment window limited to cases where a country is experiencing an epidemic of a life-threatening disease that:
- has spread across several areas of the country,
- is causing significant economic disruption and balance of payments pressures, and
- has the capacity to spread, or is already spreading, rapidly within and across countries.
- Fund staff to draw on assessments by relevant international agencies, especially the World Health Organization, and national authorities when conducting analysis.
- Form of assistance:
- Up-front grants to immediately pay off upcoming debt service payments to the Fund on eligible debt.
- Eligible debt would not include credit committed concurrently with, or after, qualification.
- Size constraint:
- Grant support amount set at 20 percent of the member’s quota, subject to the constraint that such support could not exceed the level of eligible Fund debt outstanding and conditional upon the availability of resources in the CCR Trust.
- Exceptions:
- Possibility of providing assistance in excess of 20 percent of quota under exceptional circumstances specified in the staff paper.
- Management intends to consult informally with the Executive Board before proposing formal Board consideration of grants in excess of 20 percent of quota under these exceptions.
Executive Board assessment and Directors’ views
- Directors welcomed enhancing Fund support to members affected by public health disasters and underscored the importance of coordination with other international institutions, including the World Bank.
- Broad support for transforming the PCDR Trust into the CCR Trust and for the staff’s proposals, with some Directors noting:
- It would have been helpful to discuss other options, such as increased access under the PRGT facilities.
- The need to qualify references to low-income countries, since not all low-income countries hit by public health disasters would be eligible for CCR access.
- Some Directors called for inclusion of other PRGT-eligible members, including but not limited to microstates.
- Reservations by a number of Directors regarding use of the exceptions to exceed 20 percent of quota, while others stressed the need for flexibility.
- Directors supported the proposal to liquidate the MDRI-I Trust and transfer all remaining balances to the General Account of the CCR Trust (through the SDA).
- Directors agreed to amend the liquidation provision of the MDRI-II Trust Instrument to allow transfer of remaining balances upon its liquidation to the General Account of the CCR Trust, effective upon each contributor’s consent.
- Some Directors expressed concern that transfer of MDRI balances to the CCR Trust could divert potential resources away from the PRGT and underscored the importance of securing additional bilateral resources to ensure adequate financing of the CCR Trust for potential future cases.
- Directors looked forward to a comprehensive review of the CCR Trust five years after its establishment, or earlier if warranted.
Policy rationale and coordination
- The CCR Trust is the Fund’s response to the G-20 request (November 2014, Brisbane) for Bretton Woods Institutions to continue strong support to countries severely affected by the Ebola outbreak through a combination of concessional loans, debt relief and grants, and to explore new, flexible mechanisms to address economic effects of comparable crises.
- The instrument enables the Fund to quickly and flexibly adjust policies in the face of unexpected international developments, including pandemics, to serve members’ needs, especially the most vulnerable.
- Emphasis on close coordination and effective collaboration with other international institutions and national authorities, and drawing on assessments by relevant international agencies, especially the World Health Organization.
Press Release No. 15/53, February 13, 2015, IMF Communications Department.