Global Creditors Agree Debt Relief for Poor Countries Hit By Pandemic

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The international creditors have now agreed on debt relief for some of the world’s poorest countries that are worst hit by the COVID-19 pandemic. The virus is rapidly spreading and has sparked the deepest downturn in the world’s economy.

Some 76 countries, which include 40 sub-Saharan Africa. Are to be allowed to have debt payments worth a combined $20 suspended by creditors both the official. And the private creditors, with a remainder of $12 billion in the amount due to the multilateral institutions still to be sorted out.

The French Finance minister Bruno Le Maire. Told the journalists that they had obtained a debt moratorium at the level of bilateral creditors. And private creditors for a worth of up to $20 billion.

The Agreement on Debt Relief

The central bank governors, the finance ministers, and the G7 agreed to provide temporary debt relief to the poorest countries. And also to provide their support where possible to the countries. So far, in a joint statement. They said they were willing to offer a time-bound suspension on the debt service payments. This is due to the official bilateral claims for all countries eligible for World Bank concessional financing. That is if joined by China and other countries in the G20 major economies. And as agreed upon with the Paris Club group of creditors

Coronavirus pandemic and economy

On Tuesday 14th March, the IMF, in its 2020 World economic Outlook. Has confirmed that the global economy is expected to backdrop by about 3%. That is during this 2020 which is a hot corona virus-driven downfall of activity . And this is going to mark the steepest downturn since the great depression of the 1930s. The World Bank and the IMF is issuing their emergency aid to countries that are doing their level best to contain the spread of the novel coronavirus and mitigate its economic impact. They thereby composed a call for debt relief on 25th March. But China, which is a significant creditor and other G20 nations, has not officially supported this proposal.

In a tweet by the World Bank, president David Malpass thanked the US treasury secretary Steven Mnuchin. This is after hosting the G7 meeting. And backing his joint call with IMF managing director Kristalina Georgieva for the temporary debt standstill.

An IMF and World Bank spring meeting held by a video conference due to the pandemic provided a somber backdrop by the forecast. The meeting, which generally draws so many people, was stripped to the bare maximum.  This happened with a lot of engagement among central bankers, finance ministers, and other policymakers not taking part.

The Debt Cancellation

The pandemic will hit the poor countries to the extreme due to the lack of adequate health care facilities and enough resources to fight the virus. At this hard time when each country is working hard to save lives and saving the economy. The cancellation of debts will be a huge benefit in helping the countries stand up after the pandemic.

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