The International Monetary Fund Executive Board announced yesterday that it has approved immediate debt relief to 25 of the world’s poorest countries to help address the impact of the COVID-19 pandemic.
Debt service relief has been granted to: Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen.
Grants will be given to cover IMF obligations for an initial phase of six months, under the Catastrophe Containment and Relief Trust (CCRT). The IMF urged donor countries to contribute more to the Trust, which can currently provide approximately $500 million in debt-service relief.
Education International welcomes the move, which is essential to enable the poorest countries to protect their citizens and ensure their rights during the coronavirus crisis. The debt relief allows governments to spend money on crucial public services such as health, education and social protection, instead of debt servicing.
However, Education International urges the IMF to go further and cancel debt for more countries and for longer and the G20 to follow suit and commit to a cancellation of official bilateral debt at their meeting this week. Without more extensive debt relief, many low-income governments will be forced to continue servicing international debt obligations instead of taking the necessary steps to safeguard their citizens from the effects of COVID-19. Importantly, debt servicing was undermining governments’ ability to ensure rights to health and education even before the pandemic; according to the Jubilee Debt Campaign, 64 lower income countries spend more on external debt payments than they spend on healthcare. Concurrently, education expenditure often depends on the levels of debt servicing. In Niger, for example, an increase in debt servicing of 31 % resulted in a 41 % decrease in education expenditure in the period 2015-17 (Eurodad, 2020).
Education International, together with over 200 civil society organisations has called for the permanent cancellation of all external debt payments to be made in 2020. In addition, we would like to see a plan for continued systematic and comprehensive debt relief in the future to resolve the debt crisis so that no country is burdened by unsustainable debt.
Last week, EI joined the ITUC in calling for the International Financial Institutions to take a comprehensive, swift and humane response to the multifaceted COVID-19 crisis. This requires the IMF and World Bank to produce a clear plan to coordinate extensive debt relief but also to protect jobs and the real economy and take quick action to support health, education and social protection. With the Spring Meetings currently underway, Education International urges the International Financial Institutions not to miss this opportunity to take decisive action to support all countries to protect their citizens during this global crisis. We also urge Finance Ministers of donor countries to step up and show leadership and solidarity by answering the IMF’s call to increase contributions to the underfunded Catastrophe Containment and Relief Trust.