- The UK government has announced £150 million for an IMF fund to cancel debt payments for poor countries hit by coronavirus
- There are concerns that countries will struggle to qualify for the debt relief
As part of its budget, the UK government has announced today that it is providing £150 million to the IMF to fund cancellation of debt payments for poor countries hit by epidemics such as coronavirus. The IMF scheme allows for the cancellation of debt payments to the IMF by poor countries for a limited period of time, if a set of criteria are met.
Reacting to the news Tim Jones, Head of Policy at Jubilee Debt Campaign, said:
“Cancelling debt payments in response to health and economic crises is a vital step to keep money in countries and to protect public spending. However, the IMF scheme to cancel debt payments is very hard for countries to qualify for. All poor countries that are being hit by the economic impacts of coronavirus need to benefit from this debt relief, regardless of the extent of the outbreak of the virus within their own country. The £150 million announced by the UK government today is welcome but it must lead to meaningful debt relief rather than sitting at the IMF.”
Tim Jones continued:
“Many countries are already in debt crisis and the economic impact of coronavirus is only going to make that worse. The IMF needs to ensure its loans to debt crisis countries are not used to bail out previous lenders, but instead help countries restructure debts. Otherwise, people will suffer through austerity and public spending cuts.”
According to the IMF, 34 out of 70 countries it assesses are already in debt default or at high risk of being so, up from 17 in 2013. Jubilee Debt Campaign has calculated that between 2010 and 2018 developing country average external debt payments increased by 85% and are at their highest level since 2004.
Research by Jubilee Debt Campaign in October 2019 found that the IMF are spending $93 billion bailing out reckless lending to 18 countries. The IMF is breaking its own rules when it lends to high debt countries where debts are not restructured or defaulted on.