The IMF and World Bank are calling for an immediate suspension of all debt payments from International Development Association countries to their creditors, if those countries request a delay in repayments.
The coronavirus outbreak is likely to have severe economic and social consequences for IDA countries, which are home to a quarter of the world’s population and two-thirds of the world’s population living in extreme poverty, according to the two groups.
A statement from the organisations said: “The World Bank Group and the IMF believe it is imperative at this moment to provide a global sense of relief for developing countries as well as a strong signal to financial markets. The international community would welcome G20 support for this call to action.”
The IMF and WBG are also inviting G20 nations to identify countries with “unsustainable debt situations”, and to prepare a proposal for comprehensive action by official creditors to address both the financing and debt relief needs of poorer nations.
The groups will seek endorsement for these proposals at the next World Bank development committee, which is expected to take place in mid-April.
The Jubilee Debt campaign, a coalition of national organisations and local groups around the UK, which focuses on developing countries debt, predicted earlier this week that increased borrowing costs and falling income from commodities amid the coronavirus pandemic are making poor countries’ debt crises even worse.
Additionally, the Organisation for Economic Co-operation and Development forecast that the pandemic could push a number of nations into a recession if global GDP growth falls as low as 0.5% this year.
This follows the organisations granting of debt relief to Somalia, as the country enters an enhanced Heavily Indebted Poor Countries Initiative, a scheme run by the IMF and WBG to give debt relief to the poorest nations in the world, as the country looks to ease its $5.2bn debt.
