International Monetary Fund Managing Director Kristalina Georgieva | File photo
Monetary Fund on Monday announced it had approved immediate debt relief for 25 poor countries to help them free up funds to fight the coronavirus
"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," IMF Managing Director Kristalina Georgieva
said in a statement.
The IMF's revamped Catastrophe Containment and Relief Trust (CCRT) enables the IMF to deliver grants for debt relief benefitting eligible low-income countries in the wake of catastrophic natural disasters and major, fast-spreading public health emergencies.
The CCRT can currently provide about $500 million in grant-based debt service relief, according to Georgieva. "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," she said.
On April 9, the IMF MD had said
that the pandemic inflicted an economic crisis unlike any in the past century and will require a massive response to ensure recovery. She said the world needed to brace for "the worst economic fallout since the Great Depression."
The countries benefitting are nearly all in Africa, but also include Afghanistan, Yemen and Haiti.
Even in the best-case scenario, the IMF expects only a "partial recovery" next year, assuming the virus fades later in 2020, allowing normal business to resume as the lockdowns imposed to contain its spread are lifted.
According to a UN report, billions of people living in countries teetering on the brink of economic collapse are being further threatened by a looming debt crisis.
The UN-led Inter-Agency Task Force in its report on Financing for Development suggested measures governments must take to avert debt overload and address the economic and financial havoc caused by the pandemic.
"The global community was already falling behind in efforts to end poverty, take climate action and reduce inequalities," UN Deputy Secretary-General Amina Mohammed said.