EU donates €183m to IMF fund to tackle debt relief for poorest Covid-hit nations

IMF chief Kristalina Georgieva urges others members to boost the dwindling fund

IMF Managing Director Kristalina Georgieva said she was thankful to the EU and its member countries for the contribution. AFP

The European Union contributed €183 million ($217.19m) to the International Monetary Fund’s Catastrophe Containment and Relief Trust (CCRT) on Monday, as IMF chief Kristalina Georgieva urged more members to follow its lead.

The CCRT allows the Washington-based lender to provide debt relief grants to the poorest and most vulnerable countries affected by catastrophic natural disasters or public health disasters, such as Covid-19.

IMF managing director Kristalina Georgieva said she was thankful to the EU and its member countries for the contribution, as it was a critical step to help the world’s most vulnerable countries provide health care and economic support for their people during the pandemic.

“This is an unprecedented crisis that has hit low-income countries especially hard," she said. "Contributions like this will enable countries to free up resources to cope with Covid-19 and to increase health and social spending."

The global economy is expected to contract 4.4 per cent this year as the fallout from the coronavirus pandemic ravages economies, according to the IMF, which sees the world economy rebounding by 5.2 per cent in 2021.

Last week, Unctad, the United Nations trade and development body, said inequalities and vulnerabilities between countries around the world will worsen as the effects of the pandemic disrupt any progress made on poverty and other sustainable development goals (SDGs). It also warned that the distribution of a viable vaccine is likely to expose long-entrenched inequalities in the global trading system.

Ms Georgieva, who said the EU and the IMF have a strong partnership on development financing, urged other member countries to contribute and help replenish the trust.

CCRT, which was set up in February 2015 during the Ebola outbreak, has limited resources available for catastrophe relief because the IMF has already disbursed about $500 million (Dh1.84 billion) in immediate debt relief to all 29 CCRT-eligible members since the pandemic began this year.

The relief on debt service payments that the CCRT provides frees up additional resources to meet exceptional balance of payments needs created by the disaster and for containment and recovery.

Other contributors to the trust include the UK, Japan, Germany, Netherlands, Sweden, China, Mexico and Malta.

Jutta Urpilainen, European Commissioner for International Partnerships, said the Commission will continue supporting its partner countries in maintaining their path toward the SDGs despite dire financial situations.

“Debt levels were already high before the crisis and in many countries they are now simply becoming unsustainable," she said.