Mar 26, Colombo: The World Bank and the International Monetary Fund on Wednesday urged official bilateral creditors to suspend debt payments and provide immediate debt relief to the poor countries impacted by the coronavirus pandemic if requested.
Issuing a joint statement to the G20 concerning debt relief for the poorest countries, the two global lending agencies said the coronavirus outbreak is likely to have severe economic and social consequences for International Development Association (IDA) countries, home to a quarter of the world’s population and two-thirds of the world’s population living in extreme poverty.
“With immediate effect—and consistent with national laws of the creditor countries—the World Bank Group (WBG) and the International Monetary Fund (IMF) call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance.”
They said the measure will help with IDA countries’ immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country.
The World Bank Group and the IMF urged the world’s G20 countries - the 20 largest economies - to support their call for action.
“We invite G20 leaders to task the WBG and the IMF to make these assessments, including identifying the countries with unsustainable debt situations, and to prepare a proposal for comprehensive action by official bilateral creditors to address both the financing and debt relief needs of IDA countries. We will seek endorsement for the proposal at the Development Committee during the Spring Meetings (April 16/17).”
The World Bank Group and the IMF believe it is imperative at this moment to provide a global sense of relief for developing countries as well as a strong signal to financial markets.
“The international community would welcome G20 support for this Call to Action,” they said.
Leaders of G20 countries will hold a virtual meeting on the COVID-19 pandemic on Thursday, which will be chaired by Saudi Arabia’s King Salman bin Abdulaziz Al Saud.
According to the World Bank, 76 countries are currently eligible to receive IDA resources based on their poverty level.
Sri Lanka has graduated from IDA at the end of FY17, but will receive transitional support on an exceptional basis through the IDA18 period (FY18-20).