World Bank, IMF ask G20 to allow poorest nations to delay debt payments
March 26, 2020 |
Request based on need to divert funds for coping with COVID-19 pandemic
The World Bank and International Monetary Fund on Wednesday requested that Group of 20 nations put on hold the debt payments made by some of the poorest countries, if asked, in order to let them focus resources on fighting the spread of the deadly novel coronavirus, COVID-19.
Taking aim at the International Development Association (IDA) nations, the multi-lateral lenders issued a joint statement saying these countries, which are home to a quarter of the world’s population and two-thirds of the world’s population living in extreme poverty, will need relief.
“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,” the statement said.
Latin American and Caribbean nations that are considered eligible for IDA funds are: Dominica, St. Vincent, Grenada, Guyuana, Haiti, Honduras, Nicaragua, and St. Lucia.
In fiscal 2020, basic eligibility for IDA support depends primarily on a nation’s poverty rate, which it defines as gross national income per capita below the current threshold of $1,175 per fiscal year.
“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,” the statement said. The We will seek endorsement for the Proposal at the Development Committee during the Spring Meetings,” the statement said.
"The World Bank Group and the IMF 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 annual meetings of the IMF and World Bank, taking place for the first time in a virtual space rather than the gathering of thousands of delegates and press in Washington, DC April 16 and 17 in an effort to slow the spread of the virus. COVID-19 has crippled the global economy, fractured financial markets and killed 20,857 people so far. Nearly half a million people have been infected as of Wednesday afternoon, according to the Johns Hopkins University Coronavirus Resource Center.