The IMF Executive Board Extends Debt Service Relief for 24 Eligible Low-Income Countries

IMF News, October 8, 2021

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Canonical URL: The IMF Executive Board Extends Debt Service Relief for 24 Eligible Low-Income Countries

Press Release No. 21/291 dated October 8, 2021.
The Executive Board approved on October 6, 2021 a fourth tranche of debt service relief from the Catastrophe Containment and Relief Trust (CCRT) for 24 member countries with eligible debt falling due in the period through January 10, 2022.
The approval included the inclusion of the Kyrgyz Republic and Lesotho among the beneficiary countries, enabling these members to receive relief of their debt service falling due to the Fund through January 10, 2022.
Afghanistan: approval of a fourth tranche of debt relief for Afghanistan was not proposed due to lack of clarity within the international community regarding the recognition of the government; the Fund’s engagement with Afghanistan continues to be on pause.

Fourth tranche approved: approximately SDR 87.9 million (US$124 million).
Subject to the availability of sufficient resources in the CCRT, debt service relief for all beneficiary countries could be provided for the remaining period from January 11 to April 13, 2022, amounting to approximately SDR 82.1 million.
Cumulative debt service relief for the entire two-year period could amount to about SDR 690 million (US$973 million).

Managing Director Kristalina Georgieva 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 debt service relief while leaving the CCRT adequately funded for future needs.
So far, donors have pledged contributions totaling about SDR 609 million (US$860 million).
Donors listed include: the European Union, the UK, Japan, Germany, France, the Netherlands, Spain, Switzerland, Norway, Singapore, Greece, China, Mexico, the Philippines, Sweden, Bulgaria, Luxembourg, and Malta.
Specific recent pledges:
- Japan provided a second grant contribution of US$50 million (SDR 35.2 million) on September 20, 2021, in addition to US$100 million (SDR 73.4 million) provided in April 2020.
Executive Directors welcomed recent contributions by Spain, Greece, and the Philippines and the second contribution by Japan, but stressed that additional resources are needed to ensure adequate grant resources for other CCRT qualifying shocks while continuing to provide debt service relief through April 2022.

Directors endorsed staff’s proposal for a two-step approach for approval of debt service relief under the CCRT for the remaining period through April 2022: an immediate fourth tranche through January 10, 2022, followed by consideration of a subsequent tranche in January 2022 informed by an update on CCRT resources.
Directors agreed that the Kyrgyz Republic and Lesotho meet eligibility and qualification requirements for CCRT debt service relief in connection with the COVID-19 pandemic and approved grant assistance for 24 beneficiary countries with eligible debt service falling due during the fourth tranche period.
Directors noted that resources freed up so far by CCRT debt service relief have helped mitigate the impact of the pandemic on CCRT-eligible countries.
Directors concurred that countries receiving CCRT grants are generally pursuing appropriate macroeconomic policies in response to the pandemic and noted that a number have continued the transition to upper credit tranche-quality programs, which would provide a stronger policy framework for recovery.
Directors underlined the importance of continued Fund policy support for other CCRT beneficiary countries through regular surveillance and capacity building activities.

Directors noted varied progress in implementing governance safeguards commitments regarding COVID-19 related spending in CCRT-eligible countries.
Concerns and observations:
- Regretted implementation delays in some countries, particularly in conducting ex-post audits of crisis-related spending and disclosing beneficial ownership information on entities awarded government contracts.
- Delays in some cases are linked to capacity constraints to make needed legal changes.
Directors underscored the importance of continued follow-through on commitments on governance and transparency, supported by technical assistance if needed.

Directors looked forward to the review of the CCRT expected in 2022/23, including discussion of CCRT eligibility criteria and funding.
Directors stressed the need to ensure evenhandedness while retaining sufficient flexibility, taking into account the availability of resources.

International Monetary Fund, Press Release No. 21/291 (October 8, 2021).