The dire need to provide debt relief to the poorer countries that have been hit by the coronavirus pandemic was reiterated by the chiefs of the World Bank and International Monetary Fund on Friday while also insisting that major role has to be played by official bilateral creditors.
Emergency programs to offer grants and loans to member countries have already been launched by the IMF and the World Bank in which the major focus has been on providing credit relief to the developing countries and emerging markets. Some of such countries are already in the debt distress. The two world bodies have also urged the official bilateral creditors to offer to the world’s poorest countries in the form of immediate debt relief.
“Poorer countries will take the hardest hit, especially ones that were already heavily indebted before the crisis,” the World Bank’s president, David Malpass, told the International Monetary and Financial Committee, the steering committee of the IMF.
“Many countries will need debt relief. This is the only way they can concentrate any new resources on fighting the pandemic and its economic and social consequences,” he said, according to a text of his remarks.
Emergency operations in 60 countries have already been started by the bank, Malpass said, and added that the board of the bank was evaluating the first 25 projects valued at almost $2 billion to be funded from a $14 billion fast-track facility to provide financial aid in the area of health-care on an urgent basis.
Existing resources are also being redirected to the coornavirus pandemic in at least 35 countries at the insistence of the World Bank and projects worth $1 billion among them have already been approved by the bank. He said that plans of spending $160 billion (128.3 billion pounds) in the next 15 months were begin finalized by the bank on the overall.
During the virtual Spring Meetings in April, a joint plant for debt relief would be presented by the IMF and World Bank, Malpass said.
Malpass said that in 2020, official bilateral debt service payments of $14 billion have to be made by a number of the poorest countries and such debts include interest and amortization payments. Out of that amount, less than $4 billion was owed to the United States and other Paris Club members. China, a major creditor, is not a Paris Club member.
A lot now depends on the official creditors of the poor and low income countries because almost half of such countries are already in “high debt distress”, said Kristalina Georgieva, IMF’s managing director.
Private creditors would play a role in the current economic situation as they did during the 2008-09 global financial crisis, she said and added that discussions of the current economic scenario were being held among the world’s 20 largest economies, the Group of 20, and in the Paris Club.
“The sooner we do it, the better,” she said. “The same way the fund during the global financial crisis brought together both official creditors and private creditors to assess a good pathway through a dramatic crisis, we have to do it this time around as well.”
(Adapted from Reuters.com)