The Catastrophe Containment and Relief Trust (CCRT) of the International Monetary Fund (IMF) has received a boost of 183 million Euros from the European Union (EU) as announced on Monday 23rd, November, 2020. This contribution of 183 million euros (equivalent to SDR 152 million or US$217 million) to the IMF’s CCRT, provides debt service relief to countries hit by catastrophic events including public health crises.
“I am very thankful to the EU and its member countries for the generous contribution of 183 million euros to the CCRT—a critical step to help the world’s most vulnerable countries provide health care and economic support for their people during the ongoing pandemic,” IMF Managing Director Kristalina Georgieva said in a press release issued by the Fund.
“This is an unprecedented crisis that has hit low-income countries especially hard. Contributions like this will enable countries to free up resources to cope with COVID-19 and to increase health and social spending,” she said. Georgieva went on to state that the EU and the IMF have a strong partnership on development financing. She therefore urges other member countries to join the EU in contributing to the CCRT. “Contributions from our member countries are instrumental in helping the Fund support the most vulnerable countries,” Ms. Georgieva said.
Jutta Urpilainen, European Commissioner for International Partnerships, said: “The Commission is determined to continue supporting its partner countries in maintaining their path toward the SDGs despite dire financial situations. Debt levels were already high before the crisis and in many countries [1] they are now simply becoming unsustainable. This is why we have decided to contribute €183 million for debt relief through this IMF mechanism.”
The CCRT allows the IMF to support international debt relief efforts when poor and vulnerable countries are hit by natural disasters or public health crises—including the COVID-19 pandemic—with grants for debt service relief. Ms. Georgieva has called upon the international community to help replenish the CCRT, which has limited resources available for catastrophe relief at this time. The IMF has already disbursed about US$500 million (or EUR 422 million) in immediate debt relief to all 29 CCRT-eligible members since the pandemic began this year.
The relief on debt service payments frees up additional resources to meet exceptional balance of payments needs created by the disaster and for containment and recovery. Established in February 2015 during the Ebola outbreak and modified in March 2020 in response to the COVID-19 pandemic, CCRT grants complement donor financing and IMF concessional lending through the Poverty Reduction and Growth Trust (PRGT).
The initial relief for 25 eligible countries was approved on April 13, 2020. In earlier cases, three Ebola-afflicted countries (Guinea, Liberia, and Sierra Leone) received assistance from this trust close to US$100 million in February-March 2015. The previous Post-Catastrophe Debt Relief Trust was used to provide assistance to Haiti in July 2010 of about US$270 million, eliminating Haiti’s entire outstanding debt to the IMF.
By Zainab Iyamide Joaque