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IMF cancels debt payments of 25 'vulnerable' countries amid Covid-19 pandemic

The debt payments of the countries, which are primarily in Africa, will be cancelled for at least six months.

IMF chief Kristalina Georgieva pictured at a press conference in Washington DC las month.
IMF chief Kristalina Georgieva pictured at a press conference in Washington DC las month.
Image: Xinhua News Agency/PA Images

THE INTERNATIONAL MONETARY Fund has announced immediate debt relief for 25 “vulnerable” countries to help them free up funds to fight the coronavirus pandemic.

The debt payments of the countries, which are primarily in Africa, will be cancelled for at least six months.

“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,” IMF Managing Director Kristalina Georgieva said in a statement.

The IMF board approved $500 million through the IMF Catastrophe Containment and Relief Trust (CCRT) to cancel six months of debt service for Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, DR Congo, The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.

‘Positive step’

Eric LeCompte. the Executive Director of Jubilee USA Network and a United Nations Finance Expert, described the news as “an incredibly positive step”.

“These countries need to bolster their health systems right away and cancellation of debt for six months will help these countries. Many of these countries have less than 50 critical care unit beds per country.

“All of the countries could benefit from more than just a six-month debt cancellation. As the poorest countries in the world, they really need full cancellation.”

The IMF and the World Bank have called for rich nations to stop collecting debt payments from these countries from 1 May until June 2021.

The CCRT was first set up to combat the Ebola outbreak in west Africa 2015 and has been repurposed to help countries deal with Covid-19.

The fund currently has $500 million, with Japan, Britain, China and the Netherlands among its main contributors.

“I urge other donors to help us replenish the trust’s resources and boost further our ability to provide additional debt service relief for a full two years to our poorest member countries,” Georgieva said.

Last week, the World Bank said it would roll out $160 billion in emergency aid over 15 months to help countries stricken by the virus, including $14 billion in debt repayments from 76 countries to other governments.

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Contains reporting from © AFP 2020  

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Órla Ryan

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