The International Monetary Fund and World Bank, has called upon the Governments of poor Nations to “put a hold on debt payment“. This is so that the countries can be financially capable to battle the Coronavirus pandemic.The World Bank and the IMF, feels the need to provide a global sense of relief to developing countries at this time.
Countries that are home to two-thirds of the world’s population living in extreme poverty are the focus. Such countries qualify for the most generous/low cost loans from the International Development Association (IDA) financed by wealthier nations.
According to the organisation, the Coronavirus outbreak might have severe economic and social consequences for IDA countries. The initiative, will help these countries face immediate liquidity needs to fight the challenges posed by the pandemic.
The World Bank and the IMF has called on the group of 20 nations (G20), to support the Initiative. The Initiative is themed “All official Bilateral Creditors to suspend debt payments from IDA countries that requests forebearance“.
The initiative, will give time for assessment of the crisis impact and financing needs of each of the IDAcountries. World Bank and IMF will also identify the countries with unsustainable debt situations.
Official Bilateral Creditors are to address both the financing and debt relief needs of the IDA countries. This will be done through a comprehensive proposal for action prepared by World Bank.
World Bank and IMF will seek endorsement for the proposal at the “Development Committee” during the spring meetings (April 16-17).
The World Bank, earlier this month, committed $14bn to aid developing countries struggling with the spread of the Coronavirus.
The IDA, is an international financial institution which offers concessional loans and grants to the world’s poorest developing countries. 76 countries are currently eligible to receive IDA resources.
Eligibility for IDA support depends first and foremost on a country’s relative poverty, defined as Gross National Income (GNI). IDA, also supports small island economies that lack credit worthiness needed to borrow from the International Bank for Reconstruction and Development (IBRD).
Nigeria, being one of the IDA countries, is credit worthy for some IBRD borrowing and referred to as a “blend” country