IMF approves debt relief for 25 countries to help them fight Covid-19

The six-month grants will allow some of the poorest nations to free up resources to deal with the outbreak

IMF managing director Kristalina Georgieva said the fund was likely to revise its growth forecast for the global economy. AFP

The International Monetary Fund approved an immediate debt relief package for 25 countries struggling to cope with the economic effects of the coronavirus pandemic.

The debt relief for some of the poorest nations in the world will be provided under the fund's revamped Catastrophe Containment and Relief Trust, the Washington-based fund said on Tuesday.

“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.

Countries that will receive debt relief include Afghanistan, Benin, Burkina Faso, the Central African Republic, Chad, Comoros, the Democratic Republic of Congo, the Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, Sao Tome and Principe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.

The trust can provide about $500 million (Dh1.83bn) in grant-based debt service relief, including the recent $185m pledge by the UK and $100m provided by Japan.

China and the Netherlands are among the nations also stepping forward with significant contributions.

The IMF executive board last month approved changes to provide up to two years of debt service relief to its most vulnerable members by expanding the trust's qualification criteria.

All member countries with per capita income below the World Bank's operational threshold for concessional support are now eligible for debt service relief.

The IMF has already launched a fund-raising exercise to enable the trust to provide about $1bn for the current pandemic.

"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 Georgieva said.

The IMF on April 4 said it received a record number of requests for funds from developing countries struggling to deal with the pandemic.

Around 85 countries have already approached the lender for emergency assistance – the highest number in the institution's 75-year history.

The fund is looking to double its emergency financing to $100bn to help struggling economies. It will make available its $1 trillion financial capacity to meet requests for funding from its members.

The global economy is facing its toughest challenge since the Great Depression and could contract more than 1.5 per cent this year.

The IMF expects recovery to begin only next year as virus-related economic woes are contained.

The pandemic has forced governments to shut borders and brought travel and tourism to a halt. About 75 million tourism sector jobs are at risk worldwide.

The virus has infected more than 1.9 million people globally and killed about 120,000, according to the Johns Hopkins University, which is tracking Covid-19 cases worldwide. More than 453,000 people have recovered.

Governments worldwide have launched stimulus packages worth more than $8tn to support their economies as unemployment surges due to restrictions on movement.

The United Nations last month called for a separate $2.5tn package by the G20 to help developing economies cope with the pandemic.