IMF extends $238m of debt service relief to 28 low-income countries

Grants will cover payments that were due between April 14 and October 15 this year

A woman walks past the International Monetary Fund (IMF) headquarters in Washington. The fund extended debt service relief to the 28 poorest countries until October this year and said further extensioShow more

The International Monetary Fund is extending debt service relief for 28 of the world's poorest countries, allowing them to conserve funds for pandemic mitigation measures.

The relief will be provided in the form of grants that will cover debt service payments due for repayment between April 14 and October 15 this year, the Washington-based lender said. Some 168 million special drawing rights ($238m) of grants are being issued under the Catastrophe Containment and Relief Trust (CCRT).

"This tranche of grants for debt service relief will continue to help free up scarce financial resources for vital emergency health, social, and economic support to mitigate the impact of the Covid-19 pandemic," the IMF said in a statement on Monday.

The fund, which is this week holding its Spring Meeting alongside the World Bank, said last week it will upgrade its current 5.5 per cent growth forecast for the global economy on the back of $16 trillion of fiscal support from governments and a speedy vaccine rollout.

However, it warned recovery prospects are "diverging dangerously" with many emerging nations facing a 20 per cent loss in per capita income when compared to pre-crisis forecasts. This means "millions of people will face destitution, homelessness and hunger", IMF managing director Kristalina Georgieva warned.

Last month, the IMF issued an urgent fundraising appeal to members to raise up to $1.4 billion to provide debt relief through the CCRT for poorer nations and to leave it adequately funded to meet future needs. Thus far, it has secured pledges for just over half of this amount from the European Union, the UK, Japan, Germany, France, the Netherlands, Switzerland, Norway, Singapore, China, Mexico, Philippines, Sweden, Bulgaria, Luxembourg and Malta.

"Subject to the availability of sufficient resources in the CCRT", debt service relief could be extended to poorer nations from October 16 this year to April next year, the IMF said. If sufficient funds were raised, this would increase the amount of grants available for debt service relief to $694m.

The EU said on Monday it had disbursed about €170m ($199m) to the CCRT.

"In this difficult period, the resources freed up can provide social services for the most vulnerable people, such as access to essential healthcare and education for young people," Jutta Urpilainen, European Commissioner for International Partnerships, said.