The World Bank Group (WBG) and the International Monetary Fund have issued a joint statement to bilateral creditors requesting debt relief for the poorest countries. The financial institutions called on G20 to suspend debt payments from IDA countries that request forbearance.
The joint statement says that the coronavirus outbreak may have serious economic and social ramifications for these countries. IDA is one of the largest sources of assistance for the world’s 76 poorest countries with eligibility for support depending on GNI per capita below an established threshold ($1,175 in the fiscal year 2020).
Kenya is among countries eligible to receive IDA resources thus may be relieved from debt repayment should it request forbearance. The IMF and World Ban argue that delaying debt repayments will help with immediate liquidity needs to tackle the COVID19 impact and allow time to assess the financing needs in these countries.
G20 countries are invited to task WBG and IMF in making these assessments; identifying the countries with unsustainable debt situations and prepare a proposal for comprehensive actions by official BILATERAL creditors to address both financing and debt relief need for IDA countries.
International Development Association is a lending arm of the World Bank Group that lends money on concessional terms. This means that IDA credits have a zero or very low-interest charge and repayments are stretched over 30 to 38 years, including a 5- to 10-year grace period. In the fiscal year ending June 30, 2019, IDA commitments totaled $22 billion, of which 36 per cent was provided on grant terms.