Washington-based World Bank Group together with the International Monetary Fund (IMF) has called on all its official bilateral creditors to suspend debt repayments of poor countries that receive loans from its concessionary window and help them tackle challenges posed by the coronavirus outbreak.
About the quarter of the world population lived in countries that qualified for concessionary assistance under the International Development Assistance (IDA ) credit. This is also the most vulnerable group during the current Covid-19 outbreak and needs support from the developed world represented by the G-20 countries.
“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 two agencies said in a joint statement.
“This will help with IDA countries’ immediate liquidity needs to tackle the challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country,” the joint statement added.
There are 76 IDA countries including Afghanistan, Bangladesh, Bhutan, Maldives, Nepal and Pakistan. Sri Lanka, Vietnam and Bolivia graduated from IDA at the end of the 2017 financial year, but will receive transitional support on an exceptional basis through the IDA18 period (financial years 2018-20), according to the World Bank.
The joint statement further invited G20 leaders to task the WB and the IMF to make these assessments, including identifying the countries with unsustainable debt situations, and to prepare a proposal for comprehensive action by the official bilateral creditors to address both the financing and debt relief needs of the IDA countries.
“The World Bank Group 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 international community would welcome G20 support for this call to action,” the statement said.