World Bank, IMF urge creditors to suspend debt from poor countries

The World Bank and the International Monetary Fund (IMF) have requested creditors to grant debt relief for the poorest countries.

The financial institutions called on G20 to suspend debt payments from International Development Association (IDA) countries that request forbearance.

In a joint statement, the regulators said 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 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. 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.