IMF Executive Board authorises fourth tranche of debt relief for 24 low-income countries

The International Monetary Fund's (IMF) Executive Board has authorised a fourth tranche of debt relief from the Catastrophe Containment and Relief Trust (CCRT) on October 6, 2021, for the 24 member nations who are having qualifying debt due during the timeframe through January 10, 2022. This relief will be provided to the low-income countries to assist them in fighting against the COVID pandemic, Xinhua reported.

According to a press release from the IMF, the Executive Board further accepted the addition of the Kyrgyz Republic and Lesotho as beneficiary nations, allowing these low-income countries to obtain debt relief from the IMF until January 10, 2022. The fourth tranche of debt relief, worth about $124 million was authorised after three previous tranches which were approved on 13th April 2020, 2nd October 2020, as well as 1st April 2021. 

This debt relief will help in providing financial resources for critical health, societal, as well as economic solutions to combat the COVID pandemic's consequences. Debt service relief for all beneficiary countries might be given for the remaining period from January 11, 2022 to April 13, 2022.

Kristalina Georgieva, the Managing Director of IMF, had announced an emergency fundraising drive in March 2020 to generate $1.4 billion USD in donations for the CCRT. This drive would allow the CCRT to give financial help for debt service relief for up to two years.

There were several donor countries that provided funds to the CCRT. The European Union, United Kingdom, Japan, Germany, France, The Netherlands, Spain, Switzerland, Norway, Singapore, Greece, China, Mexico, The Philippines, Sweden, Bulgaria, Luxembourg, as well as Malta, were among the countries who have made contributions, amounting to a total of over $860 million, the release read.

Executive Directors remark on the fourth tranche of debt relief 

As per the press release, the Executive Directors have supported the staff's recommendation for a two-step method to approve debt service relief under the CCRT for funding the poorest and most vulnerable members until April 2022. This would imply an instant fourth payment for the period ending January 10, 2022, backed with a consideration of a final tranche in January 2022 based on a review of CCRT resources.

The funds released so far by CCRT debt service relief have assisted in reducing the impact of the COVID outbreak on CCRT-eligible nations, according to the directors. Directors further agreed that nations that have received CCRT debt relief funds are usually implementing suitable macroeconomic measures in response to the worldwide pandemic's economic consequences.

They have also observed that a number of these nations have continued the shift to higher-quality credit tranche programs that would offer a better regulatory framework for the recovery phase and expressed optimism for future advances in this area. 

Directors highlighted the varying progress made in CCRT-eligible nations in fulfilling governance safeguards obligations connected to COVID-related expenditure. As a result, the directors emphasised the necessity of continuing to follow through on governance and transparency pledges, backed up by technical help where necessary.

(Image: AP)