IMF approves $500m in debt relief for 25 countries amid COVID-19 challenges

April 14, 2020 / Comments (0)

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The International Monetary Fund has (IMF) has approved an amount of US$500 million in grant-based debt service relief to 25 countries to help them deal with the negative impact of the COVID-19 on their various economies.

The fund’s Managing Director, Ms. Kristalina Georgieva in a statement on Monday, April 13, said the grant falls under the IMF’s Catastrophe Containment and Relief Trust.

Countries that will benefit from the grant include “Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, DR Congo, and The Gambia.

The others are Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen.

“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) as part of the Fund’s response to help address the impact of the COVID-19 pandemic,” Ms. Kristalina Georgieva said.

She explained in the statement that the grant was made available only to the “poorest” and “most vulnerable” IMF members.

“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 statement noted.

The donors to the CCRT fund include the UK, China, Japan and the Netherlands.

“The CCRT can currently provide about US$500 million in grant-based debt service relief, including the recent US$185 million pledge by the U.K. and US$100 million provided by Japan as immediately available resources. Others, including China and the Netherlands, are also stepping forward with important contributions. 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,” Ms. Kristalina Georgieva noted.

IMF approves US$1 billion disbursement to Ghana for COVID-19 fight

Meanwhile, the International Monetary Fund (IMF), has also approved a disbursement of US$1 billion to Ghana to help address the urgent fiscal and balance of payments needs that Ghana is facing in the wake of the novel Coronavirus pandemic.

The money, which is to be drawn under the Rapid Credit Facility (RCF), is also to help the country “improve confidence, and catalyze support from other development partners,” Deputy Managing Director and Chair of the IMF Executive Board, Mr. Zhang, issued in a statement on April 13th, 2020.

Ghana’s Finance Minister, Ken Ofori-Atta, recently urged China to help ease the debt burden of African countries expected to struggle with the economic impact of the coronavirus pandemic.

He has already indicated that the cumulative effect of the novel coronavirus pandemic will cost Ghana GHS9.505 billion.

Speaking to a US-based think-tank, the Center for Global Development on some of the debt challenges African countries face, Mr. Ofori-Atta, said he felt “China has to come on stronger” on debt relief during “this apocalyptic moment”.

“I think our African debt to China is $145 billion or so. About $8 billion of payments is required this year [2020] and about $3 billion being interests; so that needs to be looked at,” he noted.

Source: Citi Business News

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