IMF Executive Board Extends Debt Service Relief for 25 Eligible Low-Income Countries

IMF News, December 20, 2021

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The Executive Board of the International Monetary Fund (IMF) approved on December 15, 2021 a fifth and final tranche of debt service relief under the Catastrophe Containment and Relief Trust (CCRT).
The tranche covers 25 member countries with eligible debt service falling due to the IMF from January 11 to April 13, 2022.
The approval completes the two-year COVID-related debt service relief first approved on April 13, 2020.

Fifth tranche amount: approximately SDR 82.1 million (about US$115 million).
Cumulative debt service relief over the two-year period: about SDR 690 million (US$ 964 million).
Fundraising target launched March 2020: SDR 1 billion (US$1.4 billion).
Pledged contributions to date (as reported): about SDR 609 million (about US$852 million).
Number of donors listed: contributions from the European Union, the UK, Japan, Germany, France, the Netherlands, Spain, Switzerland, Norway, Singapore, Greece, China, Mexico, the Philippines, Sweden, Bulgaria, Luxembourg, Malta, and Indonesia (18 Fund members and the EU noted in Executive Board assessment).

The debt service relief helps free up scarce financial resources for vital health, social, and economic support to mitigate the impact of the COVID-19 pandemic.
CCRT grants for debt service relief on obligations to the Fund falling due from April 14, 2020 through January 10, 2022 have helped poorest and most vulnerable members free up resources to tackle the pandemic and its repercussions.

Executive Directors endorsed staff’s proposal for the approval of the fifth and final tranche for the remaining two-year period through April 13, 2022.
Directors encouraged CCRT-eligible countries to continue making progress on implementing governance safeguards commitments regarding COVID-19 related spending, and reiterated the importance of transparency and accountability.
Directors welcomed the transition to upper credit tranche-quality programs by some CCRT-eligible members, noting these programs provide a stronger policy framework for the recovery period, and looked forward to further progress.
Directors appreciated generous support from 18 Fund members and the EU that helped finance the support, but noted that total grant pledges of about SDR 609 million are short of the full two-year cost and well short of the SDR 1 billion target.
Directors agreed there is a compelling case for approval of the tranche given the continuing human and economic toll of the pandemic, despite concerns about the CCRT’s reduced capacity.

Approval of the fifth tranche will severely reduce the CCRT’s pre-COVID cash buffer and potentially limit the CCRT’s capacity to provide relief in future emergencies.
Directors stressed the urgent need for continued fundraising efforts to address the CCRT’s underfunding.
In light of simultaneous financing requests from the Fund, Directors encouraged a more coordinated approach to fundraising to help donors better understand and prioritize the various efforts underway.
Directors looked forward to the comprehensive review of the CCRT planned for FY2023, including a discussion of access rules and the financing framework to ensure the sustainability of the Trust going forward.
Many Directors saw merit in an earlier review to manage underfunding risks, while being mindful of staff workload.

Source: IMF Press Release No. 21390, December 20, 2021.