Sub-Saharan Africa is struggling to navigate an unprecedented health and economic crisis—one that, in just a few months, has jeopardized decades of hard-won development gains and upended the lives and livelihoods of millions.
The global economy is embarking on a lengthy path to recovery with modest growth expected for 2021, after a severe contraction this year. The global forecast is subject to unusually large risks. Emerging markets and developing economies face an uphill battle. Low-income developing countries are in an especially vulnerable position and risk a persistent and significant deterioration in development prospects.
Controlling the pandemic and cushioning the impact on the economy are key. LIDCs should adopt targeted containment measures and strictly prioritize spending and refrain from policies that could create long term damage. Multilateral cooperation and extensive support from the international community are indispensable.
The IMF has helped EMDEs through emergency lending and debt service relief. Targeted surveillance and capacity development will tackle new policy challenges and react nimbly to the needs of the membership including fragile and small states.
This paper proposes that the Executive Board approve the disbursement of a second 6-month tranche of CCRT debt service relief to 28 of the 29 members, covering the period October 14, 2020 through April 13, 2021, given staff’s assessment that sufficient financial resources are available.2 In this context, the paper also provides brief updates for each beneficiary country on its policy responses to the pandemic and staff’s assessment of these policies and the use of resources freed up by debt service relief. It also provides an update on the finances of the CCRT and the fundraising efforts to secure adequate resources for grant assistance in the future. Based on grant pledges to date, resources are not sufficient to extend CCRT relief beyond the proposed second sixth-month period.
This paper discusses the United Republic of Tanzania’s Request for Debt Relief Under the Catastrophe Containment and Relief Trust. IMF debt service relief will help free up resources for public sector health needs and other emergency spending, as well as mitigate the balance of payments shock resulting from the pandemic. Given the risks ahead, it would be important to ensure close cooperation with multilateral organizations and donors and ensure enough budget allocations on health and other priority spending. The authorities are committed to using the additional resources for their intended purposes and in a transparent manner, including through ex-post audits of corona virus-related spending. To deal with the remaining risks, it will be important to safeguard appropriate funding for health and other priority social spending in the FY2020/21 budget, as well as ensure close cooperation with the World Health Organization, multilateral agencies, and donors. The focus includes addressing arrears on value-added tax refunds and government expenditures, enhancing human capital and the business environment, and improving the affordability of bank credit.
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.