IMF Executive Board Extends Debt Service Relief for 28 Eligible Low-Income Countries through October 15, 2021

IMF News, April 5, 2021

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Canonical URL: IMF Executive Board Extends Debt Service Relief for 28 Eligible Low-Income Countries through October 15, 2021

Press Release No. 21/99; April 5, 2021.
The Executive Board approved on April 1, 2021 a third tranche of grants under the Catastrophe Containment and Relief Trust (CCRT) for debt service relief for 28 member countries.
The approved grants enable disbursement of CCRT funds for payment of all eligible debt service falling due to the IMF from these members for the period from April 14, 2021 to October 15, 2021.
Estimated amount for this tranche: SDR 168 (US$238) million.
Subject to availability of sufficient resources in the CCRT, debt service relief could be provided for the remaining period from October 16, 2021 to April 13, 2022 amounting to a total of about SDR 680 (US$964) million.

In March 2020, the Managing Director launched an urgent fundraising effort to raise SDR 1 billion (US$1.4 billion) in grants for the CCRT to enable up to a maximum of two years of relief while keeping the CCRT adequately funded for future needs.
Thus far, donors have pledged contributions totaling about SDR 545 million (US$774) million.
Donor contributors listed include: the European Union, the UK, Japan, Germany, France, the Netherlands, Switzerland, Norway, Singapore, China, Mexico, Philippines, Sweden, Bulgaria, Luxembourg, and Malta.
The Executive Board noted the recent large contribution by the European Union and encouraged continued efforts to reach the SDR 1 billion funding target.

Directors welcomed the opportunity to consider approval of the third tranche of CCRT grants for the Fund’s poorest and most vulnerable members.
Directors noted that the COVID-19 pandemic continues to exact a severe human and economic toll on these countries and that resources freed by the first and second tranches had helped mitigate the impact of the pandemic.
Directors agreed available resources and pledges are sufficient to finance the third tranche for April 14 to October 15, 2021 and approved grant assistance under the CCRT for relief for 28 eligible members with debt service falling due during this period.
Directors concurred that countries receiving CCRT grants are generally pursuing appropriate macroeconomic policies in response to the pandemic.
Directors welcomed that a number of member countries were transitioning to Upper Credit Tranche-quality arrangements expected to provide a stronger policy framework for recovery.
Directors observed that most countries would benefit from a resumption of Fund surveillance and updated debt sustainability assessments.

Directors noted progress in implementing governance safeguards commitments related to COVID-19 spending in CCRT-eligible countries.
Directors regretted implementation delays in some countries, particularly in disclosing beneficial ownership information on entities awarded government contracts.
Directors underscored the importance of continued follow-through on commitments on governance and transparency, supported if necessary by technical assistance.

Immediate implication: Grants for the third tranche free up scarce financial resources for vital emergency health, social, and economic support to mitigate the impact of the COVID-19 pandemic.
Funding recommendation: Continued efforts to secure additional resources to reach the SDR 1 billion target so adequate grant resources are in place for CCRT-qualifying shocks in the future.
Surveillance and assessment recommendation: Resume Fund surveillance and update debt sustainability assessments for most beneficiary countries.
Governance recommendation: Follow-through on governance and transparency commitments, with technical assistance as needed, including timely disclosure of beneficial ownership for entities awarded government contracts.

Source: IMF Press Release No. 21/99 (April 5, 2021).