The Catastrophe Containment and Relief Trust (CCRT) can play an important role in helping the poorest and most vulnerable countries cope with the COVID-19 pandemic. It is designed to complement the Fund’s concessional lending facilities by providing grants for debt relief in order to free up additional resources for dealing with the fallout from exceptional disasters. This paper summarizes key elements and funding status of the CCRT and sets out proposals for replenishing the trust and ensuring that it is “fit for purpose” in the current crisis.
Access limits in the PRGT were then halved with the coming into effect of the 14th General Review of Quotas in January 2016.
The CCRT’s CC window is not primarily a tool for providing speedy assistance to pandemic-affected countries: it eases cash pressures that are spread out over two or more years and that are modest in size (generally 0—20 percent of quota) compared with the scale of the support (50 percent) that can be provided in a single disbursement through the emergency financing facilities. However, it is an important tool for reducing the debt burden of poor countries, including those that rely on emergency loan financing from the Fund.
In making the determination of the occurrence of a Qualifying Health Disaster, the Fund may draw on assessments of the health situation and outlook made by national authorities, the World Health Organization (WHO), the World Bank, and other relevant agencies. The occurrence of a Qualifying Public Health Disaster, as defined, is expected to be a rare event, limiting access to the CC window to exceptional circumstances.
Eligible debt is defined as all of the member’s debt to the Fund (including to the Fund as Trustee) that was outstanding as of the date of the determination by the Fund that the member is qualified to receive grant assistance under the CC window, and in respect of which the member had made regular scheduled debt service payments (principal and interest) before such determination, but shall exclude any debt to the Fund that is scheduled to be repaid with assistance under other debt relief trusts administered by the Fund or under the PCR window of the CCRT.
See para. 36 of
For the 2015 campaign, the Managing Director approached 50 member countries (including G-20 countries, advanced and emerging countries, and past contributors to concessional fund-raising efforts) for contributions totaling US$300 million. Six of those members responded positively to this request, pledging a total amount of US$93.3 million. Staff followed up in 2019 with countries that did not respond to the 2015 fund-raising call, but no additional pledges were received.
The CCRT was initially funded by repurposing the PCDR Trust (which had SDR 102 million) and transferring remaining balances in the Multilateral Debt Relief Initiative (MDRI-I and MDRI-II, for SDR 13 and 39 million, respectively). The initial financing for the PCDR came from the transfer of funds from the MDRI-I Trust which was financed by the Special Disbursement Account (SDA) resources from the sale of the Fund’s gold, and the MDRI-II Trust was financed from 37 bilateral contributors.
Ranges are based on the funding needs for the top half of the most vulnerable CCRT-eligible members using various metrics, including: amount of eligible Fund debt service falling due; share of such eligible debt service falling due as a percentage of government revenues, GDP, and Fund quota; and member rankings based on debt/GDP ratio, debt distress rating, and quality of healthcare system.
For example, Guinea, Rwanda, and Sierra Leone each have SDR 50 million of debt service (about 30 percent of quota for each) falling due to the Fund in the next two years. Democratic Republic of Congo alone would qualify for SDR 213 million in CCRT relief (of which only SDR 30 million would debt service falling due to the Fund in the next two years).
Since the CCRT includes SDA resources, the uniformity of treatment principle applies. This principle requires that trust resources be available on a uniform basis to all eligible members facing a similar situation. Revisions that would extend the relief to a broader set of countries affected by this pandemic can only become effective if there is sufficient aggregate financing in the CCRT to provide relief beyond already identified potential recipients.