In direct response to the COVID-19 crisis the
International Monetary Fund (IMF) Executive Board has adopted some immediate enhancements to its Catastrophe Containment and Relief Trust (CCRT) to enable the Fund to
provide debt service relief for its poorest and most vulnerable members. The CCRT enables the IMF to deliver grants for debt relief benefiting eligible low-income countries in the wake of catastrophic natural disasters and major, fast-spreading public health emergencies.
The Fund’s existing facilities for low-income countries (LICs) provide a vehicle for the speedy provision of financial assistance to member countries hit by natural disasters, either through the Rapid Credit Facility (RCF) or through augmentation of the funding already being provided through other facilities such as the Standby or Extended Credit Facilities. The quick disbursement of funds strengthens national financial capacity, including external payments capacity, to tackle relief and recovery challenges.
To address catastrophic disasters, the Fund created a mechanism in 2010 to provide additional relief to its poorest and most vulnerable member countries to help meet their exceptional balance of payments needs. Under this mechanism, the Fund can provide grants from a trust fund—the Post Catastrophe Debt Relief (PCDR) trust—that are used to pay off debt service falling due to the Fund. These grants ease pressures on the member’s balance of payments and create financial space by reducing its debt service burden.
This paper proposes reforms to this mechanism to cover situations where the member is experiencing an epidemic of an infectious disease that constitutes a significant threat to lives, economic activity, and international commerce across countries.
Longer-term program engagement (LTPE) occurs when a member has spent at least seven of the past 10 years under Fund-supported financial arrangements. In response to the Executive Board’s request for periodic updates on the incidence of LTPEs, this is the fifteenth such report and provides information through September 1, 2014