THE International Monetary Fund (IMF), an organisation that works with member countries to modernise their economic policies and institutions has extended debt service relief for Lesotho and 24 other low income countries in a continued fight against the COVID-19 pandemic.
Dec. 22, 2021
2 min read
IMF extends debt service relief for Lesotho
IMF chief, Kristalina Georgieva
- Tranche completes the two-year COVID-related debt service relief of about US$ 964 million
- The approval of the fifth tranche will severely reduce the CCRT’s pre-COVID cash buffer
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The Executive Board of the IMF approved on December 15, a fifth and final tranche of debt service relief under the Catastrophe Containment and Relief Trust (CCRT) a total of 25 countries with eligible debt service falling due to the IMF from January 11 to April 13, 2022.
“The approval of the fifth tranche will severely reduce the CCRT’s pre-COVID cash buffer and potentially limit the CCRT’s capacity to provide relief in future emergencies. The directors however, considered that on balance there is a compelling case for approval of the tranche in light of the continuing human and economic toll of the pandemic. Directors thus agreed on the urgent need for continued fundraising efforts to address the CCRT’s underfunding.
“In light of simultaneous financing requests from the Fund, the directors encouraged a more coordinated approach to fundraising to help donors better understand and prioritise the various efforts underway,” the IMF chief, Kristalina Georgieva said in a statement on Monday.
Countries receiving debt service relief in the fifth tranche under the CCRT include Lesotho, Benin, Burkina Faso Tajikistan, Solomon Islands, Sierra Leone, Sao Tome and Principe, Rwanda, Niger, Nepal, Mali, Malawi, Madagascar, Liberia, Kyrgyzstan, Haiti, Guinea-Bissau, Guinea, Gambia, Ethiopia, Djibouti, Comoros, Central African Republic and Burundi.
The approval of the fifth tranche, totaling approximately US$115 million follows four prior tranches approved on April 13, 2020, October 2, 2020, April 1 2021 and October 6, 2021, and helps free up scarce financial resources for vital health, social and economic support to mitigate the impact of the COVID-19 pandemic.
The tranche completes the two-year COVID-related debt service relief of about US$ 964 million.
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In March 2020, the IMF launched an urgent fundraising effort to raise USD 1.4 billion in grants for the CCRT. This would enable the CCRT to provide financial assistance for COVID-related relief on debt services for up to a maximum of two years, while leaving the CCRT adequately funded for future needs.
So far, donors have pledged contributions totaling USD 852 million, including from the European Union (EU), the United Kingdom (UK), Japan, Germany, France, the Netherlands, Spain, Switzerland, Norway, Singapore, Greece, China, Mexico, the Philippines, Sweden, Bulgaria, Luxembourg, Malta and Indonesia.
The directors noted that CCRT grants for debt service relief on obligations to the Fund falling due from April 14 2020 through January 10 2022 have helped its poorest and most vulnerable members, including Lesotho, to free up resources to tackle the pandemic and its repercussions.
They encouraged CCRT eligible countries to continue making progress on implementing governance safeguards commitments regarding COVID-19 related spending, and reiterated the importance of transparency and accountability.