The two financial institutions have called on G20 countries to suspend debt payments from International Development Association (IDA) countries to the poorest countries in the world over the coronavirus pandemic that is currently disrupting and straining countries across the globe.
In a joint statement, on Wednesday, the World Bank Group (WBG) and the International Monetary Fund called on bilateral creditors requesting debt relief for the world’s 76 poorest countries and enable them to redirect funds towards confronting the economic fallout from the Covid-19 pandemic.
The IMF and World Bank 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. IDA is a lending arm of the World Bank Group that lends money on concessional terms. In the fiscal year ending June 30, 2019, IDA commitments totaled $22 billion, of which 36 per cent was provided on grant terms.
Kenya is among the 76 poorest countries and is currently grappling with containing the spread of Covid-19 with 28 cases so far reported.
Meanwhile, the IMF and the World Bank on Wednesday cleared Somalia to begin receiving debt relief under the Highly Indebted Poor Countries’ Initiative (HIPC),, a key move that will allow the Horn of Africa country to lower its $5.2 billion in external debt to around $557 million.
“Achievement of the HIPC decision point is a major step forward for Somalia’s economic progress, allowing the country to advance towards its long-term objective of inclusive economic growth and poverty reduction,” said James Swan, Head of the United Nations Assistance Mission for Somalia (UNSOM).
The development is welcome news for Somalia as it prepares for one-person, one-vote elections later this year against the backdrop of extreme humanitarian challenges.