World Bank, IMF seek debt relief for poor countries
THE World Bank Group (WBG) and International Monetary Fund (IMF) have issued a joint statement urging the G20 countries to consider debt relief for the poor countries to enable them to effectively mitigate against the spread and impact of Covid-19.
The call comes at a time when G20 members are convening remotely through video conferencing following the outbreak of Covid-19, which began in China last December and has spread across the world, killing more than 21 000 people.
As global leaders are expected to assess the economic and social impact of the pandemic, there are fears this will heavily affect developing countries, home to a quarter of the world’s population and two-thirds of the world’s population, which living in extreme poverty.
G20 finance ministers and central bankers agreed this week to develop an “action plan” to respond to the outbreak, which the International Monetary Fund expects will trigger a global recession.
“With immediate effect — and consistent with national laws of the creditor countries —the World Bank Group and the International Monetary Fund call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance,” reads the statement.
“This will help with IDA countries’ immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country.”
The IDA (International Development Association) is the part of the World Bank that helps the world’s poorest countries while G20 is an international forum for governments and central bank governors from 19 major economies and the European Union (EU).
“We invite G20 leaders to task the WBG and the IMF to make these assessments, including identifying the countries with unsustainable debt situations, and to prepare a proposal for comprehensive action by official bilateral creditors to address both the financing and debt relief needs of IDA countries.
“We will seek endorsement for the proposal at the development committee during the Spring Meetings (April 16–17),” the Breton Woods institutions said.
The WBG and the IMF said they believe it is imperative at this moment to provide a global sense of relief for developing countries as well as a strong signal to financial markets.
“The international community would welcome G20 support for this call to action,” they said.