The International Monetary Fund approved funding of $500 million on Monday to cancel six months of debt payments for 25 of the world’s most impoverished countries so they can help tackle the COVID-19 pandemic.
IMF Executive Director Kristalina Georgieva issued a statement saying the IMF executive board approved the immediate debt service relief for 19 African countries, Afghanistan, Haiti, Nepal, Solomon Islands, Tajikistan and Yemen.
She said the fund’s Catastrophe Containment and Relief Trust (CCRT) had about $500 million in resources on hand, including new pledges of $185 million from the U.K., $100 million from Japan and undisclosed amounts from China, the Netherlands and others. The fund is pushing to raise the amount available to $1.4 billion.
About $215 million of the total would be used for grants to the first 25 countries over the next six months, with extensions possible up to two years, an IMF spokeswoman said.
“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,” Georgieva said in a statement.
The 19 African countries to receive debt relief are: Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, The Gambia, Guinea, Guinea-Bissau, Liberia, Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone and Togo.
Georgieva urged other donor countries to help replenish the CCRT and boost the fund’s ability to provide additional debt service relief for a full two years to its poorest member countries.
An IMF spokesman said the fund was looking at actions that could be taken quickly, but “another sale of gold reserves is not currently on the table.”
In March, the IMF approved changes that would allow the CCRT to provide up to two years of debt service relief to the fund’s poorest members as they responded to the outbreak of COVID-19, the respiratory illness caused by the novel coronavirus.
The changes enabled countries to request the aid even if the outbreak had not yet caused a significant impact.
U.N. Secretary-General Antonio Guterres and a group of 165 former global leaders and prominent international figures have urged the suspension of debt repayments for the world’s poorest and most vulnerable countries so they can use their scant resources for the virus crisis.
Eric LeCompte, executive director of Jubilee USA Network, an alliance of more than 75 U.S. organizations and 700 faith communities working for debt relief, called the IMF announcement “an incredibly positive step.”
“Many of these countries have less than 50 critical care unit beds per country,” LeCompte said in a statement. “These countries need to bolster their health systems right away and cancellation of debt for six months will help these countries.”
He said the Central African Republic has only three critical-care unit beds for a population of 5 million.
LeCompte said more needs to be done. “As the poorest countries in the world, they really need full cancellation” of their debts, he said.