IMF Executive Board Approves Immediate Debt Service Relief for 25 Eligible Low-Income Countries
IMF News, April 16, 2020
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- Published: April 16, 2020
Approval and scope of debt service relief
- Executive Board approved relief on debt service for 25 member countries eligible for support from the Catastrophe Containment and Relief Trust (CCRT).
- A further 4 countries are expected to request such relief in the coming weeks.
- The approval enables disbursement of grants from the CCRT for repayment of total debt service falling due to the IMF over the next six months, with potential extensions, up to a maximum of full two years from April 14, 2020, subject to availability of sufficient grant resources.
- The initial relief provided to these countries amounts to SDR 157.1 million (US$213.4 million).
- Relief on debt service is intended to free up scarce financial resources to be directed toward emergency medical and other relief efforts during the pandemic.
Fundraising, donor contributions, and financing target
- The Managing Director launched an urgent fundraising effort to enable the CCRT to provide relief on debt service for a full two years while leaving the CCRT adequately funded for future needs.
- This will require a commitment of about US$1.4 billion.
- Donor pledges and contributions already include:
- US$185 million pledge by the United Kingdom.
- US$100 million provided by Japan as immediately available resources.
- Other donors, including the People’s Republic of China and the Netherlands, are also stepping forward with important contributions.
CCRT reform, eligibility criteria, and operational changes
- On March 26, the Executive Board adopted a set of reforms to the CCRT to enable the IMF to provide immediate debt service relief for its poorest and most vulnerable members during the COVID-19 pandemic.
- The CCRT delivers grants to eligible low-income countries to cover their IMF debt service obligations in the wake of catastrophic natural disasters and during major global public health emergencies.
- Eligibility for CCRT support is limited to IMF member countries with annual per capita GNI below the World Bank’s operational cut-off (or twice the cut-off for small states), generally the poorest and most vulnerable member countries.
- Directors approved technical modifications to the CCRT Instrument to facilitate operational implementation of assistance for debt relief under the Catastrophe Containment (CC) window.
Executive Board assessment, conditions, and monitoring
- Executive Directors determined, effective April 14, 2020, that the COVID‑19 pandemic is a Qualifying Public Health Disaster under the CCRT and is inflicting severe economic disruption across the Fund’s membership.
- Directors agreed the crisis is creating balance of payments needs on a scale that warrant concerted international efforts to support the poorest and most vulnerable countries through substantial additional grant support for debt service relief.
- Directors agreed the CCRT has sufficient financial resources to deliver a first tranche of grants for debt service relief to all 29 countries with outstanding credit to the Fund that are potentially eligible for CCRT assistance over the next six months.
- Directors noted that 25 of these countries have requested assistance and meet the specific criteria for qualification; they looked forward to considering requests from the remaining four eligible members.
- Directors would consider committing additional tranches, up to a cap of two years through April 13, 2022, in light of the availability of CCRT resources at the end of each tranche period.
- Directors stressed the urgency of the ongoing fundraising effort to ensure timely delivery of assistance to eligible countries.
- Directors underscored the importance of monitoring macroeconomic situations of recipient countries, including policy responses to the pandemic, and looked forward to an update from staff toward the end of the initial six‑month period of debt service relief.
- Several Directors highlighted the need for careful analysis of debt sustainability, safeguards, and accountability, and called for staff assessment on the effectiveness of country policies and use of debt service relief resources prior to commitment of future tranches.
Source: IMF press release, April 15, 2020.
References
- https://www.imf.org/en/topics/imf-and-covid19
- The IMF and COVID-19 (Coronavirus)
- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg
- The Executive Board
- PRESS CENTER
- Catastrophe Containmentand Relief Trust (CCRT)
- a set of reforms to its Catastrophe Containment and Relief Trust (CCRT)
- http://www.IMF.org/external/np/sec/misc/qualifiers.htm
- https://www.imf.org/en/home
