The International Monetary Fund IMF and the World Bank Group WBG have asked official bilateral lenders to suspend debt repayments from International Development Association IDA countries that asked for forbearance due to the coronavirus pandemic impacts on their economies.
The international financial institutions made the request in a joint statement released on Wednesday, stating that it will help IDA countries with immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country.
The Bretton Woods institution’s statement reads: “The coronavirus outbreak is likely to have severe economic and social consequences for IDA countries; home to a quarter of the world’s population and two-thirds of the world’s population living in extreme poverty.
“With immediate effect-and consistent with national laws of the creditor countries-the World Bank Group and the International Monetary Fund call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance.
“This will help with IDA countries’ immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country.”
G-20 countries’ leaders were also urged to task the IMF and World Bank with making assessments to identify countries with “unsustainable debt situations and to prepare a proposal for comprehensive action by official bilateral creditors to address both the financing and debt relief needs of IDA countries.”
The Bretton Woods institutions said it is important to provide a global sense of relief for developing countries to send a strong signal to financial markets.
The International Development Association is an international financial institution that offers concessional loans and grants to the world’s poorest developing countries.
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