World Bank, IMF call for suspending debt payment by developing countries

The World Bank and International Monetary Fund (IMF) Wednesday urged upon its bilateral creditors to suspend debt payments from International Development Association (IDA) countries to help them combat the coronavirus (COVID-19) pandemic.

Pakistan being part of IDA countries, will also get a marginal benefit if the creditor countries agree to the joint proposal of IMF and the World Bank.

In a joint statement, the World Bank Group and the IMF said the coronavirus outbreak was likely to have severe economic and social consequences for IDA countries, home to a quarter of the world’s population and two-thirds of the world’s population living in extreme poverty.

Meanwhile, Minister for Economic Affairs Division Hammad Azhar welcoming the joint statement of WB and IMF said in his tweet that Prime Minister Imran Khan had been urging this since the start of outbreak of COVID-19 pandemic.

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“We hope it will be accepted and we also urge multi-laterals for relief on their debts,” he added.

The statement added that it was likely the proposal would be endorsed at the Development Committee during the spring meetings to be held on April 16 to 17, the statement added.

“With immediate effect—and consistent with national laws of the creditor countries—the World Bank Group and the IMF call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance.” 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 added.

“We invite G20 leaders to task the World Bank Group 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, it said.

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.

 

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