IMF and World Bank Call for Debt Freezing for Poor Countries

Published on : 03/26/2020 – 08:06

On the eve of the G20 videoconference meeting devoted to responding to the consequences of the health crisis caused by the coronavirus pandemic, the International Monetary Fund (IMF) and the World Bank called on March 25 to freeze the reimbursement of the debt of poor countries.

It is not a deletion of the debt of poor countries. Instead, the International Monetary Fund (IMF) and the World Bank are asking bilateral creditors to allow them to defer their repayments. The money used to service the debt for these countries would therefore immediately be used to finance the fight against the spread of the coronavirus and to alleviate the economic difficulties that the pandemic will cause.

The countries concerned are those eligible for the criteria of the International Development Association (IDA), a subsidiary of the World Bank, which provides aid in the form of loans at zero or very low interest rates. interest, as well as donations. Today there are 76 of them worldwide, the majority of which are in Africa. In the 2019 budget year, which ended on June 30, AID committed $ 22 billion, 36% of which was in the form of grants, according to figures from the World Bank.

Recession in G20 countries

The respite demanded by the two Bretton Woods institutions will allow them to analyze the situation and needs of each country. Addressing the top 20 economies in the world meeting on March 26 by videoconference, the IMF and the World Bank propose to list the countries whose debt burden is unsustainable and to work on its restructuring.

This will also be one of the important points that will be on the agenda of the spring meetings of the two institutions, next April 16 and 17. These meetings usually gather a lot of people at their headquarters in the American capital but will be held online this year, because of the Covid-19 pandemic.

But the pandemic will also affect the economies of the group of twenty most industrialized countries, the G20. According to the financial rating agency Moody’s, they should overall be in recession this year. These countries are expected to overall shrink by 0.5% of their gross domestic product, including -1.4% for France. In the United States, it will be -2% and in the euro zone -2.2%. China is expected to grow 3.3%, a very slow pace for this country for the past 20 years.

Read also : Coronavirus: Abiy Ahmed calls on the G20 to support African countries


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