Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved on October 6, 2021 a fourth tranche of debt service relief from the Catastrophe Containment and Relief Trust (CCRT) for 24 member countries with eligible debt falling due in the period through January 10, 2022.[1]The Executive Board also approved the inclusion of the Kyrgyz Republic and Lesotho among the beneficiary countries, enabling these members to receive relief of their debt service falling due to the Fund through January 10, 2022.
The approval of the fourth tranche, totaling approximately SDR 87.9 million (US$124 million), follows three prior tranches approved on April 13, 2020, October 2, 2020, and April 1, 2021 (see Press Releases20/165,20/304, and21/99). This debt service relief helps free up scarce financial resources for vital health, social, and economic support to mitigate the impact of the COVID-19 pandemic. Subject to the availability of sufficient resources in the CCRT, debt service relief for all beneficiary countries could be provided for the remaining period from January 11 to April 13, 2022, amounting to approximately SDR 82.1 million and a cumulative debt service relief of about SDR 690 million (US$973 million) for the entire two-year period.
In March 2020, Managing Director Kristalina Georgieva launched an urgent fundraising effort to raise SDR 1 billion (US$1.4 billion) in grants for the CCRT. This would enable the CCRT to provide financial assistance for relief on debt service for up to a maximum of two years, while leaving the CCRT adequately funded for future needs. So far, donors have pledged contributions totaling about SDR 609 million (US$860 million), including from the European Union, the UK, Japan, Germany, France, the Netherlands, Spain, Switzerland, Norway, Singapore, Greece, China, Mexico, the Philippines, Sweden, Bulgaria, Luxembourg, and Malta. On September 20, 2021, Japan provided a second grant contribution of US$50 million (SDR 35.2 million) in addition to the US$100 million (SDR 73.4 million) it provided in April 2020.
Executive Board Assessment[2]
Executive Directors endorsed staff’s proposal for a two-step approach for the approval of debt service relief under the Catastrophe Containment and Relief Trust (CCRT) for the Fund’s poorest and most vulnerable members for the remaining period through April 2022. This would entail an immediate fourth tranche for the period through January 10, 2022, followed by consideration of a subsequent tranche in January 2022 for the final portion, informed by an update on CCRT resources.
Directors agreed that the Kyrgyz Republic and Lesotho meet the eligibility and qualification requirements for CCRT debt service relief in connection with the COVID-19 pandemic. Accordingly, they approved grant assistance for debt service relief under the CCRT for 24 beneficiary countries that have eligible debt service falling due during the fourth tranche period, including the Kyrgyz Republic and Lesotho.
Directors noted that the resources freed up so far by CCRT debt service relief have helped mitigate the impact of the pandemic on CCRT-eligible countries.
Directors concurred that countries that received the CCRT grants for debt relief are generally pursuing appropriate macroeconomic policies in response to the economic fallout from the global pandemic. They noted that a number of these countries have continued the transition to upper credit tranche-quality programs, which would provide a stronger policy framework for the recovery period, and looked forward to further progress in this area. Directors also underlined the importance of continued Fund policy support for other CCRT beneficiary countries through regular surveillance and capacity building activities.
Directors noted the varied progress made in implementing governance safeguards commitments regarding COVID-19 related spending in CCRT-eligible countries. They regretted implementation delays in some countries, particularly in conducting ex-post audits of crisis-related spending and disclosing beneficial ownership information on entities awarded government contracts, while delays in some cases are linked to capacity constraints to make needed legal changes. Directors thus underscored the importance of continued follow-through on the commitments on governance and transparency, supported by technical assistance, if needed.
Directors welcomed the recent generous contributions by Spain, Greece, and the Philippines and the second contribution by Japan. They stressed, however, that additional resources are needed to ensure that adequate grant resources are in place for other CCRT qualifying shocks in the future while continuing to provide debt service relief for the remaining period through April 2022.
Directors looked forward to the review of the CCRT expected in 2022/23, including discussion of CCRT eligibility criteria and funding. They stressed the need to ensure evenhandedness while retaining sufficient flexibility, taking into account also the availability of resources.
[1]There remains a lack of clarity within the international community regarding the recognition of the government in Afghanistan. As such, the Fund’s engagement with Afghanistan continues to be on pause. Therefore, approval of a fourth tranche of debt relief for Afghanistan was not proposed at this stage.
[2]At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here:https://www.IMF.org/external/np/sec/misc/qualifiers.htm.