WASHINGTON (Reuters) – International Monetary Fund chief Kristalina Georgieva urged governments and the private sector to step up their efforts to help African countries and other emerging markets weather the economic and health impacts of the coronavirus pandemic.

Georgieva lauded a decision by the Group of 20 major economies and Paris Club creditors to temporarily suspend debt service payments by the poorest countries. She said the IMF’s steering committee had unanimously urged private sector creditors to join in to stem a massive outflow of capital from emerging markets and prevent unnecessary bankruptcies.

G20 officials and Paris Club creditors agreed on Wednesday to suspend debt service payments for the world’s poorest countries through the end of the year, a move matched by a group of hundreds of private creditors.

But finance ministers and a growing chorus of non-profit groups are calling for broader debt relief to help other low- and middle-income countries that are also plagued by high debt burdens as they brace for worsening pandemic impacts.

Coronavirus cases in Africa could shoot up from thousands now to 10 million within three to six months according to provisional modeling, a regional World Health Organization (WHO) official said on Thursday.

Speaking after a meeting of the IMF’s steering committee, Georgieva told a videoconference news briefing on Thursday that the IMF and the World Bank were looking at ways to ease the burden on other countries that also faced a high debt burden.

“Of course, there are other countries that are under the burden of debt … and both the World Bank and the IMF are committed to look into debt sustainability issues on a country by country basis,” she said, adding the institutions were working to see what more could be done to “ease that burden.”

The IMF, World Bank and ministers from African countries will meet online with UN officials and others on Friday to discuss their call for debt relief, Georgieva told reporters.

“Africa is actually a high priority for the IMF and the World Bank in terms of deploying our capacity,” she said, noting that pandemic was hitting many countries on the continent that had previously been growing at rates of 6% or more. “Now is the time to make sure that we don’t lose the momentum of this Africa on the move.”

African leaders are calling for broader debt relief after seeing external debt payments double from 2015 to 2017 to 11.8%. At 32%, the proportion of debt owed to private lenders is almost on a par with multilateral institutions at 35%.

Ethiopia last month said Africa needs $150 billion in stimulus measures to deal with a perfect storm of the high debt levels, the coronavirus pandemic, plummeting oil and commodity prices and mounting budget deficits.

U.S. Treasury Secretary Steven Mnuchin signaled in his remarks to the International Monetary and Finance Committee, that Washington was open to further debt relief measures, but gave no details.

He said he “strongly supported” Wednesday’s debt relief decision by the Group of 20 major economies and the Paris Club, and urged private creditors to take part on a voluntary basis.

Enhanced disclosure by borrowers and creditors of public and publicly guaranteed debt would allow detailed analyses of debt sustainability levels by the IMF and World Bank, he said, paving the way for “further action on debt as needed.”

Source: Read Full Article