The Executive Board of the International Monetary Fund (IMF) has approved the proposal of providing debt relief to 25 countries including Nepal in light of the coronavirus pandemic.
Issuing a statement on April 14, Kristalina Georgieva, IMF Managing Director, said the debt relief for low-income countries would help them cope with the Covid-19 crisis.
In view of the severe setback to the global economy, the Bretton Woods twins— the World Bank and the IMF—are in a virtual spring meeting to gauge the magnitude of loss and prescribe fiscal and monetary stimulus to hard-hit countries.
“Today, I am pleased to say that our Executive Board approved immediate debt service relief to 25 of the IMF’s member countries under the IMF’s revamped Catastrophe Containment and Relief Trust (CCRT),” the statement quoted Georgieva as saying. “This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts.”
The CCRT can currently provide about $500 million in grant-based debt service relief, including the recent $185 million pledge by the UK and $100 million provided by Japan as immediately available resources. Others, including China and the Netherlands, are also stepping forward with important contributions. Reportedly, the IMF MD has urged other donors to help IMF replenish the Trust’s resources and boost the fund’s ability to provide debt service relief for two years to its poorest member countries.
Apart from Nepal, Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen were chosen for debt relief.