As the coronavirus pandemic continues to ravage the world, International Monetary Fund (IMF), yesterday, said that it was dedicating $1 trillion loan to its poor members.
Its Managing Director, Ms Kristalina Georgieva, who said this ahead of the virtual spring meeting next week, added that the fund was a response to several distress calls by members who are in dire need of support.
“We have $1 trillion in lending capacity and are placing it at the service of our membership.
“We are responding to an unprecedented number of calls for emergency financing—from over 90 countries so far. Our Executive Board has just agreed to double access to our emergency facilities, which will allow us to meet the expected demand of about $100 billion in financing. Lending programmes have already been approved at record speed—including for the Kyrgyz Republic, Rwanda, Madagascar, and Togo—with many more to come.
“We are reviewing our tool kit to see how we might better use precautionary credit lines to encourage additional liquidity support, establish a short-term liquidity line, and help meet countries’ financing needs via other options—including the use of Special Drawing Rights (SDRs). And where we might be unable to lend because a country’s debt is unsustainable, we will look for solutions that can unlock critical financing,” she said.
Georgieva also noted that IMF has revived its trust fund to provide debt relief for its members who have serious financial crisis.
“We have revamped our Catastrophe Containment and Relief Trust to provide immediate debt relief to low-income countries affected by the crisis, thereby creating space for spending on urgent health needs rather than debt repayment. We are now working with donors to increase the Centre for Cultural Resources and Training (CCRT) to $1.4 billion to extend the duration of the debt relief.
“And together with the World Bank, we are calling for a standstill of debt service to official bilateral creditors for the world’s poorest countries. I am proud of the staff of the IMF for stepping up in this crisis. And I look forward to the discussions during the Spring Meetings next week on what more we can do”, Ms Georgieva explained.
She observed that many poor nations with densely- populated cities find it difficult to observe the social distancing guideline. “These nations,” she noted, “are exposed to serious shocks.
“Emerging markets and low-income nations—across Africa, Latin America, and much of Asia—are at high risk. With weaker health systems to begin with, many face the dreadful challenge of fighting the virus in densely populated cities and poverty-stricken slums—where social distancing is hardly an option.”