Reaction to $215 million of debt cancellation by IMF

The IMF has announced it will cancel $215 million of debt payments for 25 countries over the next six months due to the coronavirus pandemic.

Reacting to the news, Sarah-Jayne Clifton, Director of Jubilee Debt Campaign, said:

“The IMF’s announcement is very welcome. This debt cancellation helps keep money in countries so it can be used for urgent health spending and social protection. Crucially, the payments are being cancelled rather than rolled into the future.

“However, the scale of the economic crisis faced by developing countries requires the IMF to go much further. The IMF is sitting on $27 billion of reserves and over $135 billion of gold. It can afford to cancel more debt, and now is the time to do it. We need the cancellation of payments to be extended to a much bigger group of developing countries and be for the next full year. Beyond the IMF, debt cancellation needs to cover payments to all creditors, including the private sector, alongside the commencement of a process to work out how to bring debts down to a sustainable level once the crisis is over.”

The countries receiving the debt payment cancellation, and the amount per country as calculated by Jubilee Debt Campaign, is below. Countries are only eligible for the IMF debt cancellation if their GDP per person is below $1,145 a year.

Three of the top five recipients are Guinea, Liberia and Sierra Leone, who all received relatively large loans from the IMF in response to the Ebola pandemic in 2014. Those debts are now coming due to be paid. The fact those debt payments now need to be cancelled shows the problem of responding to pandemics through more lending rather than debt restructuring and grants not loans.

The IMF has received $500 million of donations to refund itself for cancelling debt payments. $185 million of these donations came from the UK government.

IMF debt payment cancellation by country[1]