Sierra Leone and 27 other eligible Low-Income Countries (LICs) have benefitted from the International Monetary Fund’s (IMF) third tranche of debt service relief. The vast majority of the 28 recipient countries are from Africa, although Haiti, Afghanistan, Solomon Islands, Nepal, Tajikistan, and Yemen are included.
The IMF Executive Board approved on 1st April, 2021 the third tranche of grants for debt service relief for 28 member countries under the Catastrophe Containment and Relief Trust (CCRT). This approval follows two prior tranches approved on 13th April, 2020 and 2nd October, 2020, respectively.
This third tranche of grant (April 14-October 15, 2021) will create a relief space of SDR 15,110,000 (US$21,432,320.11) and the two prior tranches amounted to SDR 13,364,500 (US$18,956,468.70) and SDR 12,220,500 (US$17,333,796.68).
It enables the disbursement of grants from the CCRT for payment of all eligible debt service falling due to the IMF from its poorest and most vulnerable members from 14th April, 2021 to 15th October, 2021, estimated at SDR 168 (US$238) million.
According to the Fund, US$ 774 million in contributions had been pledged so far, including contributions from the European Union, the United Kingdom, Japan, Germany, France, the Netherlands, Switzerland, Norway, Singapore, China, Mexico, the Philippines and Sweden. Bulgaria, Luxembourg and Malta.
This tranche of grants for debt service relief will continue to help free up scarce financial resources for vital emergency health, social, and economic support to mitigate the impact of the COVID-19 pandemic.
Subject to the availability of sufficient resources in the CCRT, debt service relief could be provided for the remaining period from 16th October, 2021 to 13th April, 2022 amounting to a total of about SDR 680 (US$964) million.
If extended, Sierra Leone stands to benefit from an additional SDR 17,554,000 (US$24,898,937.60) for the remaining period of 16th October, 2021 to 13th April, 2022, subject to sufficient resources being secured and bringing in all the two-year totals from 14th April, 2020 to 13th April, 2022 to SDR 58,249,000 (US$82,621,523.10).
The Fund Executive Directors welcomed the opportunity to consider the approval of grants under the CCRT to support the third tranche of debt service relief for the Fund’s poorest and most vulnerable members.
They noted that the COVID-19 pandemic continues to exact a severe human and economic toll on these countries and that the resources freed up by the first and second tranches of CCRT debt service relief had helped mitigate the impact of the pandemic.
However, the Directors agreed that the available resources and pledges are sufficient to finance the third tranche of debt service relief for the period from April 14 to October 15, 2021. Accordingly, they approved grant assistance under the CCRT for relief for 28 eligible members that have debt service falling due during this period.
Further, into their assessment the Directors concurred that countries that received the CCRT grants for debt relief are generally pursuing appropriate macroeconomic policies in response to the economic fallout from the global pandemic.
“They welcomed that a number of member countries were transitioning to Upper Credit Tranche-quality arrangements which would provide a stronger policy framework for the recovery period. Directors also observed that most countries would benefit from a resumption of Fund surveillance and updated debt sustainability assessments” they added.
CCRT-eligible countries are those eligible for concessional borrowing through the IMF’s Poverty Reduction and Growth Trust (PRGT) and whose annual per capita gross national income level is below $1,175. Vulnerable countries most seriously affected by the COVID-19 crisis benefit from the CCRT.
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