The IMF Executive Board on April 13, 2020, approved immediate debt service relief to 25 of the IMF’s member countries. The debt relief is approved under the Catastrophe Containment (CC) window of the IMF`s Catastrophe Containment and Relief Trust (CCRT) as part of the Fund’s response to help address the impact of the COVID-19 pandemic.
The CCRT was established in 2015 to provide grants for debt relief for the poorest and most vulnerable countries that are hit by catastrophic natural disasters or fast-spreading public health disasters with international spillover potential. Debt relief under the CCR Trust frees resources to meet exceptional balance of payments needs created by the disaster, complementing donor financing and the Fund’s concessional lending through the Poverty Reduction and Growth Trust (PRGT). Eligibility for assistance through the CCR Trust is restricted to PRGT-eligible countries which also have either a per capita GNI income below the International Development Association (IDA), World Bank operational cut-off i.e. $1,175 in fiscal year 2020 or, for small states with a population below 1.5 million and a per capita income below twice the IDA operational cut-off. The CCRT has the following two windows:
- Post-Catastrophe Relief (PCR) window, to provide exceptional assistance in the wake of a catastrophic natural disaster; and
- Catastrophe Containment window, to provide assistance in containing a fast-spreading public health disaster with international spillover potential.
The countries that will receive debt service relief under this approved facility are: Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen. It is also expected that a further 4 countries (Burundi, Djibouti, Ethiopia & Tanzania) may request debt relief under this facility in the coming weeks.
The initial debt relief provided to these countries amounts to SDR 157.1 million (US$213.4 million).
The decision has been made in wake of the COVID‑19 pandemic that is inflicting severe economic disruption across the world especially developing countries which are already debt ridden. The disruption is instigating serious impacts on the world trade and is creating balance of payments needs therefore, convincing the IMF to extend the available facilities to support the poorest and most vulnerable countries.
This debt relief will free up budgetary resources to address public health needs and support economic activity in key sectors; it will also help contain the exceptional balance of payments need resulting from the pandemic.
