JAKARTA (TheInsiderStories) – The World Bank Group and International Monetary Fund (IMF) announced the debt relief for the poorest countries amid the coronavirus outbreak, said the agencies on Wednesday (03/25). It said, the pandemic is likely to have severe economic and social consequences for IDA countries, home to a quarter of the world’ population and two-thirds living in extreme poverty.
Most of the 76 countries receiving IDA support have gross national income per capita of below $1,175.
“With immediate effect—and consistent with national laws of the creditor countries—the World Bank Group and IMF call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance,” said the World Bank and IMF.
President of World Bank David Malpass and managing director of IMF Kristalina Giorgieva believed this action will help the IDA countries’ immediate liquidity needs to tackle challenges posed by the virus outbreak and allow time for an assessment of the crisis impact and financing needs for each country.
They also asked the Group of 20 (G20) leaders to task the Funds 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),” said the both leaders.
At the same day, IMF announces has approved a 48-month arrangement under the Extended Fund Facility (EFF) with Jordan for an amount equivalent to SDR926.37 million (about US$1.26 billion or 270 percent of Jordan’ quota). The loans aimed to support the country’ economic and financial reform program.
It also provides for spending to contain and treat COVID-19. This program is anchored by critical structural reforms designed to lower electricity costs for businesses and create incentives for them to hire more young people. The aim is to support stronger and more inclusive growth, create jobs, especially for women and young people, and reduce poverty.
IMF rated, improving the fiscal situation is also needed to stabilize and bring public debt towards more sustainable levels. Continued support from donors, particularly through concessional loans and budget grants, will be critical to program success and help Jordan cope with humanitarian and economic needs.
Although the program was designed before the COVID-19 outbreak, changes were made to the program to support un-budgeted spending covering emergency outlays and medical supplies and equipment. If the impact of the outbreak is deep enough to put at risk program objectives, the program will be adapted further to the changed circumstances, upon reaching understandings with the authorities.
Following the IMF’ decision, an amount equivalent to SDR102.93 million is available for immediate disbursement and the remaining amount will be phased out over the duration of the Fund-supported program, subject to eight program reviews.
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