As Coronavirus Spreads, IMF Cancels 6 Months of Debt Payments for 25 Poorest Nations

UNITED NATIONS (AP) — The International Monetary Fund approved $500 million on Monday to cancel six months of debt payments for 25 of the world’s most impoverished countries so they can help tackle the COVID-19 pandemic.

IMF Executive Director Kristalina Georgieva issued a statement saying the IMF executive board approved the immediate debt service relief for 19 African countries, Afghanistan, Haiti, Nepal, Solomon Islands, Tajikistan and Yemen.

“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,” Georgieva said.

She said the money will come from the IMF’s revamped Catastrophe Containment and Relief Trust, which will use recent pledges of $185 million from the United Kingdom and $100 million from Japan. She urged other donors to help replenish the trust’s resources.

The 19 African countries to receive debt relief are: Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, The Gambia, Guinea, Guinea-Bissau, Liberia, Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone and Togo.

U.N. Secretary-General Antonio Guterres and a group of 165 former global leaders and prominent international figures have urged the suspension of debt repayments for the world’s poorest and most vulnerable countries so they can use their scant resources for the coronavirus crisis.

Eric LeCompte, a United Nations Finance Expert and the Executive Director of Jubilee USA Network, an alliance of more than 75 U.S. organizations and 700 faith communities working for debt relief, called the IMF announcement “an incredibly positive step.”

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

But LeCompte said more needs to be done.

“As the poorest countries in the world, they really need full cancellation” of their debts, he said.

LeCompte released the following statement on the announcement:

“This is an incredibly positive step. These countries need to bolster their health systems right away and cancellation of debt for 6 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 6-month debt cancellation. As the poorest countries in the world, they really need full cancellation.

“While we encourage more countries to donate money to this IMF trust, the IMF also needs to use its own resources.

“When this trust was used previously, the IMF sold gold in its reserve. Currently, there is $140 billion in this reserve and even selling ten billion could get us closer for debt cancellation for these countries and others.

“We worked on this mechanism since 2010 and every time it’s been used, it’s been critical for protecting some of the world’s poorest people.

“What strikes me most is that the four countries who previously received grants and debt relief from this trust are benefiting from it again. Haiti, Sierra Leone, Guinea and Liberia are again receiving this critical relief and this says something about lending and the fragility of some of the world’s poorest countries. Out of this current crisis we need to find ways to move these countries out of poverty and on a permanent path to prosperity.”

Read the IMF’s Release on the Debt Relief here

Read Jubilee USA’s March 23rd letter to IMF on a health and economic COVID-19 plan  here

Read Jubilee USA’s April 1st letter to the IMF on reserve gold funds here

Jubilee USA Network is an alliance of more than 75 US organizations and 650 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA wins critical global financial reforms and won more than $130 billion in debt relief to benefit the world’s poorest people.

* This article was automatically syndicated and expanded from Associated Press.

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