IMF lending amid Covid-19 reaches $90bn

28 Sep 20

The IMF has lent $90bn since the beginning of the coronavirus pandemic – about one-third of its current total lending commitments.

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International Monetary Fund headquarters, Washington

International Monetary Fund headquarters, Washington

 

Covid-19 has left governments struggling to meet the twin crises affecting health and the economy and, with high costs and low revenue, many have turned to international lending institutions for fiscal breathing room.

About $31bn has been disbursed as ‘emergency financing’ since the end of March, a process that is much faster than other financing and comes with far fewer requirements from the recipient countries, such as making economic reforms, according to IMF chief spokesperson Gerry Rice.

So far, 76 countries have benefited from emergency financing, including 47 low-income countries, which received a total of $10bn.

The IMF now has about $270bn of current lending commitments, Rice said – around one-third of which was approved since the end of March.

Rice warned that Covid-19 has left some governments in precarious financial positions.

“During the process of the IMF providing this emergency financing to countries, we've seen a significant increase in the debt vulnerabilities of many countries,” he said.

“And we are advising countries to take steps to try and ensure the debt remains sustainable, such as appropriate fiscal consolidation.

“Countries need to spend right now to help mitigate the pandemic, but we are also trying to advise them and work with them looking toward the medium-term needs.”

“Well over half” of potentially eligible countries have applied for the Debt Service Suspension initiative, through which lenders (including many in the private sector) allow borrower countries to spend resources on their crisis response rather than on servicing debt.

Rice said private sector participation in the scheme, which is currently voluntary, could prove an “issue”, as will whether the initiative is extended beyond 2020.

Both the IMF and the World Bank have endorsed the scheme being extended, and a decision will likely be made during a meeting of the G20 finance ministers this autumn.

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