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COVID-19: IMFC endorses extension of  debt service relief for 6 months

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By Peter Egwuatu

In its commitment to curtail the effect of coronavirus, COVID-19 pandemic on the less developed economies, International Monetary and Financial Committee, IMFC of International Monetary Fund, IMF has expressed its support for a debt service relief for another six months under the Catastrophe Containment and Relief Trust (CCRT) and progress made in securing additional loan resources for the Poverty Reduction and Growth Trust (PRGT).

In a communiqué after the end the forty-second meeting of the IMFC at the ongoing annual meeting of the IMF/World Bank, Chaired by Mr. Lesetja Kganyago, Governor of the South African Reserve Bank, the Committee said: “ We express our sympathies for the loss of human lives caused by the COVID-19 pandemic and reiterate our commitment to mitigating the health and economic impact of the pandemic on people worldwide.

“A tentative global economic recovery is underway, supported by extraordinary macroeconomic policy responses. But the recovery is partial, uneven, and marked by significant uncertainty, with the pandemic continuing to spread in places. The crisis threatens to leave long-lasting scars on the global economy, such as weaker productivity growth, heavier debt burdens, heightened financial vulnerabilities, and higher poverty and inequality. Other longstanding challenges also persist.”

To support the recovery, the Committee stated: “We will sustain our extraordinary and agile policy response, tailored to the different stages of the crisis and country-specific circumstances. We commit to using all available policy tools, individually and collectively, to restore confidence, jobs, and growth. We stand ready to assist the most vulnerable countries and people. We emphasize the need for international cooperation to accelerate the research, development, manufacturing, and distribution of COVID-19 diagnostics, therapeutics and vaccines, with the aim of supporting equitable and affordable access for all, which is key to overcoming the pandemic and supporting global economic recovery.”

“Ensuring that the IMF can support its poorest and most vulnerable members, which do not have substantial market access, is essential. We welcome the extension of debt service relief for another six months under the Catastrophe Containment and Relief Trust (CCRT) and progress made in securing additional loan resources for the Poverty Reduction and Growth Trust (PRGT).

“We support the IMF’s efforts to further expand PRGT and CCRT resources, and look forward to additional grant contributions, including from new participants. We support the extension of the Debt Service Suspension Initiative (DSSI). We are disappointed by the absence of progress of private creditors’ participation in the DSSI, and strongly encourage them to participate on comparable terms when requested by eligible countries. We encourage the full participation of official bilateral creditors. We ask the IMF to continue to support effective and transparent DSSI implementation, together with the World Bank. We welcome the G20’s agreement in principle on a “Common Framework for Debt Treatment beyond the DSSI,” which is also agreed by the Paris Club.

“We look forward to the publication of the Common Framework by the time of the G20 Finance Ministers and Central Bank Governors meeting in November 2020.

“We also welcome the IMF’s continued efforts to facilitate timely and comprehensive debt resolution by supporting enhanced coordination of official creditors; identifying gaps in the international architecture for the resolution of private claims and engaging with private creditors and other stakeholders; and reviewing the IMF’s policies related to sovereign debt. We call on the IMF to prepare an analysis of the external financing needs of developing countries and sustainable financing options” the IMFC stated.

Vanguard

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