Salone two-year IMF COVID-related debt service relief reaches $58 million
SIERRA LEONE, Freetown: The Executive Board of the International Monetary Fund (IMF) has approved a fifth and final tranche of debt service relief under the Catastrophe Containment and Relief Trust (CCRT) on 15th December, 2021.
Sierra Leone is among the 25 member countries with eligible debt service falling due to the IMF from January 11 to April 13, 2022.
The approval of the fifth tranche, totaling approximately SDR 82.1 million (about US$115 million), follows four prior tranches approved on 13th April, 2020, 2nd October, 2020, 1st April, 2021, and 6th October, 2021.
Under this final tranche, the country will benefit from debt service relief of $11.6 million ($11,554,500) which will bring it to a two-year total (Apr 14, 2020-Apr 13, 2022) of $58.2 million ($58,249,000).
This relief, according to the Fund helps free up scarce financial resources for vital health, social, and economic support to mitigate the impact of the COVID-19 pandemic.
The tranche completes the two-year COVID-related debt service relief first approved on 13th April, 2020, totaling a cumulative debt service relief of about SDR 690 million (US$ 964 million).
In March 2020, Managing Director Kristalina Georgieva launched an urgent fundraising effort to raise SDR 1 billion (US$1.4 billion) in grants for the CCRT. This would enable the CCRT to provide financial assistance for COVID-related relief on debt service for up to a maximum of two years, while leaving the CCRT adequately funded for future needs.
So far, donors have pledged contributions totaling about SDR 609 million (about US$852 million), including from the European Union, the UK, Japan, Germany, France, the Netherlands, Spain, Switzerland, Norway, Singapore, Greece, China, Mexico, the Philippines, Sweden, Bulgaria, Luxembourg, Malta, and Indonesia.
The Fund Executive Directors appreciated the generous support from 18 Fund members and the EU that have helped finance this support. They noted, however, that total grant pledges received to date of about SDR 609 million are short of the cost of the full two-year COVID-related debt service relief, and well short of the SDR 1 billion fundraising target.
The Director acknowledged that the approval of the fifth tranche will severely reduce the CCRT’s pre-COVID cash buffer and potentially limit the CCRT’s capacity to provide relief in future emergencies.
They considered, however, that on balance there is a compelling case for approval of the tranche in light of the continuing human and economic toll of the pandemic. Directors thus agreed on the urgent need for continued fundraising efforts to address the CCRT’s underfunding.
In light of simultaneous financing requests from the Fund, Directors encouraged a more coordinated approach to fundraising to help donors better understand and prioritize the various efforts underway.
Directors looked forward to the comprehensive review of the CCRT planned for FY2023, including a discussion of access rules and the financing framework to ensure the sustainability of the Trust going forward. To manage underfunding risks, many Directors saw merit in an earlier review, while being mindful of the heavy workload facing staff. ZIJ/22/12/2021