The International Monetary Fund and the World Bank have announced an extraordinary debt cancellation to combat the novel coronavirus (COVID-19).
The global bodies, in its spring 2020 virtual meeting today, April 15, said it will cancel all debts owed to them by countries that were facing a moderate or high risk of debt distress prior to the virus crisis.
Dominica is among the 27 nations which will benefit from the move, having had high risks of external and public debt distress. Other nations which will benefit from the aggressive relief effort are Afghanistan, Cameroon, Ethiopia, Honduras and Sierra Leone.
The measure was done in tandem with the G20, to ensure that vulnerable countries are free to direct all public revenues at their disposal to stop the spread of this diseases and mitigate the financial crisis, said the IMF’s Executive Board.
It is hoped that the step will help mitigate disruptions to the supply chains of essential commodities for consumption in the developed world, which is imperative to the timely delivery of medical supplies and medicines critical in the pandemic fight.
A statement by the IMF said, “As the world’s leading finance institution it is vital that we step in to guide the invisible hand of the global market in the right direction.
“We are humbled by this economic crisis and the role that we have played in precipitating such a scenario. For years, the entire international financial system, created from our Bretton Woods charter, has set countries up for the adoption of free market ideals. By providing loans across the globe, we have helped countries spread their goods and in turn strengthen the bonds and livelihoods of everyday people,” it said.
In addition to the 27 nations facing debt distress that will benefit, the IMF said all 76 of the World Bank’s International Development Association (IDA) countries will receive full debt cancellation.
“All developing countries categorised either as Middle Income Countries or Low Income Countries who face high debt vulnerabilities will see a full cancellation of debt. In total, this new process will apply to 111 countries. These countries will receive full cancellation of all debts as they wrestle with the COVID-19 Pandemic.”
Confirmed cases of the COVID-19 virus have topped two million globally with casualties surpassing 128,000 and the economic impact pushing the world towards the worst recession since the Great Depression.