IMF cancels debt repayments to help coronavirus fight

14 Apr 20

The IMF has wiped six months of debt repayments for 25 of the world’s poorest countries, to give them space to deal with the coronavirus pandemic.

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Kristalina Georgieva

IMF managing director Kristalina Georgieva

The countries, 19 of which are in Africa, will benefit from £215m of repayments being cancelled, to free up resources to fight the virus and its effects on their economies. However, critics have argued the IMF should waive payments much further into the future.

“This debt cancellation helps keep money in countries so it can be used for urgent health spending and social protection. Crucially, the payments are being cancelled rather than rolled into the future,” said Jubilee Debt Campaign director Sarah-Jayne Clifton. “However, the scale of the economic crisis faced by developing countries requires the IMF to go much further.”

She added that the fund is “sitting on $27bn of reserves and over $135bn of gold”.

“It can afford to cancel more debt, and now is the time to do it,” she said, calling for debt relief to be extended to more developing countries and for the next full year.

The relief is being provided under the IMF’s Catastrophe Containment and Relief Trust, which currently has the capacity to deliver $500m of grant-based relief.

This has been financed by donations, with the biggest donors so far being the UK and Japan.

Fund managing director Kristalina Georgieva has called for more donations, saying she hopes to be able to provide additional relief for “a full two years” to the poorest member countries.

Recent analysis from the Jubilee Debt Campaign found 64 countries spent more on debt repayments than on healthcare in 2019 – including 15 of those benefiting from this round of relief.

Of those countries, Gambia’s disparity is the most stark: 38% of government revenue is spent servicing debt, while it spends 10.8% on health.

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