Washington DC - The board of the International Monetary Fund approved $500 million through the IMF Catastrophe Containment and Relief Trust to cancel 6 months of debt service for Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.
"This is an incredibly positive step. These countries need to bolster their health systems right away and cancellation of debt for 6 months will help these countries.
"Many of these countries have less than 50 critical care unit beds per country.
"All of the countries could benefit from more than just a 6-month debt cancellation. As the poorest countries in the world, they really need full cancellation.
"While we encourage more countries to donate money to this IMF trust, the IMF also needs to use its own resources.
"When this trust was used previously, the IMF sold gold in its reserve. Currently, there is $140 billion in this reserve and even selling ten billion could get us closer for debt cancellation for these countries and others.
"We worked on this mechanism since 2010 and every time it's been used, it's been critical for protecting some of the world's poorest people.
"What strikes me most is that the four countries who previously received grants and debt relief from this trust are benefiting from it again. Haiti, Sierra Leone, Guinea and Liberia are again receiving this critical relief and this says something about lending and the fragility of some of the world's poorest countries. Out of this current crisis we need to find ways to move these countries out of poverty and on a permanent path to prosperity."
Read the IMF's Release on the Debt Relief here
Read Jubilee USA's March 23rd letter to IMF on a health and economic COVID-19 plan here
Read Jubilee USA's April 1st letter to the IMF on reserve gold funds here
WASHINGTON (CNS) — Two leading proponents of debt relief for developing countries urged the White House to lead the call for a moratorium on debt payments for poor nations so they can devote funds to fight the COVID-19 pandemic.
The request came in an April 8 letter from Bishop David J. Malloy of Rockford, Illinois, chairman of the U.S. Conference of Catholic Bishops’ Committee on International Justice and Peace, and Eric LeCompte, executive director of Jubilee USA Network, an alliance of faith-based development and advocacy groups.
The letter said a moratorium would aid the 76 poorest countries while safeguarding U.S. economic interests.
“The leadership of the U.S. government is vital to ensuring that our world will emerge from this pandemic with greater resilience and a renewed understanding of the greater interconnectedness of humanity,” the letter said.
A decision to suspend debt payments would allow for a better way to assess debt sustainability and vulnerabilities and, if necessary, open a process to restructure debt, the letter added.
The request comes as the Group of 20 finance ministers and central bankers from the European Union and industrial and emerging market nations were preparing to discuss the issue during meetings of the International Monetary Fund and World Bank starting April 14.
G-20 finance officials have long expressed concern about the high level of debt of developing nations and emerging market economies.
“Suspending debt payments, with no interest, can immediately allow countries to access funds to bolster their health systems and support needed stimulus packages in the developing world, allowing these countries to provide for their own health safety and security,” the letter said.
Bishop Malloy and LeCompte also wrote that the financial crisis that has emerged as the pandemic grows threatens U.S. imports and exports to developing countries.
“Providing a suspension of debt payments and debt relief will help safeguard our common interests of returning the U.S. economy to prosperity and growth,” they said.
Read more here.