The announcement of the debt relief to Liberia and 24 other poor nations battling the COVID-19 pandemic was announced Monday, April 13, 2020 in Washington D.C by the Managing Director of the Fund, Ms. Kristalina Georgieva upon approval of the Board of Governors of the IMF.
The debt relief is intended to help Liberia and others free up funds to fight the coronavirus pandemic.
"This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts," the IMF Managing Director disclosed.
Speaking about the IMF’s debt relief, the Deputy Minister for Economic Management at the Ministry of Finance and Development Planning(MFDP), Augustus J. Flomo, explained that the Fund had offered a window considering the adverse economic impacts of COVID-19 pandemic which the government took advantage of.
He added that the “time benefit” of the Relief is delayed repayments or rescheduling of debts and will make available physical cash to respond to the COVID-19 pandemic.
He, however, clarified that this was not a “waiver” of the country’s debt.
Minister Flomo added that the revenue slump had Limited the government’s capacity to meet up with its financial obligations to multilateral institutions, while at the same time hampering its financial ability to address the national health emergency.
He also disclosed that as a result of the IMF’s Relief announced on Monday, the Government now has an opportunity to access emergency financing windows at the IMF to help address the country’s fiscal imbalances.
The deputy minister emphasized the need for sustained collaboration between the government and the private sector, as well as, with the civil society and development partners to address the COVID-19 pandemic so as to ensure that the economy gets back on its feet.
The Fund along with the World Bank has called for rich nations to stop collecting debt payments from poor countries from May 1 through June 2021.
The debt relief will be funded by the IMF's Catastrophe Containment and Relief Trust (CCRT), which was first set up to combat the West Africa Ebola outbreak in 2015 and has been repurposed to help countries fend off COVID-19.
The fund currently has $500 million, with Japan, Britain, China and the Netherlands among its main contributors.
Twenty four (24) other countries to benefit from the Fund’s debt service relief include: Afghanistan, Benin, Burkina Faso, Central Africa Republic, Chad, Comoros, D.R Congo, The Gambia, Guinea andGuinea Bissau. Others are: Haiti, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, Sao Tome and Principe, Solomon Islands, Sierra Leone, Tajikistan, Togo and Yemen.