The World Bank Group (WBG) and the International Monetary Fund (IMF) on Wednesday jointly called on the Group of Twenty (G20) to offer debt relief for the poorest countries in order to help them tackle challenges posed by COVID-19.
The coronavirus outbreak is “likely to have severe economic and social consequences” for the poorest countries, which draw on the World Bank’s International Development Association (IDA), the two multilateral lenders said in a statement, issued to the G20.
“With immediate effect — and consistent with national laws of the creditor countries — the World Bank Group and the International Monetary Fund call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance,” the statement read.
“This 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 statement read.
Created in 1999, the G20 is a central forum for international cooperation on financial and economic issues. It comprises 19 countries plus the European Union. The countries are Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, and the United States.
The two multilateral lenders also invited 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.
They said they will seek endorsement for the proposal at the Development Committee, the joint ministerial committee of the boards of governors of the World Bank and the IMF, during the Spring Meetings, scheduled for April 16-17.
The WBG 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 statement read, adding that the international community would welcome G20 support for this call to action.
On a G20 finance ministers and central bank governors’ conference call Monday, World Bank Group President David Malpass said the COVID-19 pandemic will likely hit the poorest countries the hardest, urging stepped-up international support for these countries.
IMF Managing Director Kristalina Georgieva told the conference call that “we are particularly concerned about low-income countries in debt distress — an issue on which we are working closely with the World Bank.” Enditem