Jutta Urpilainen, Commissioner for International Partnerships, said: “The Commission supports its partner countries in maintaining their path toward the SDGs despite dire financial situations. Debt levels were already high before the crisis, in many countries they are now becoming unsustainable. This is why we have decided to contribute EUR 183 million for debt relief through this IMF mechanism.”
Kristalina Georgieva, IMF Managing Director, attended the European Foreign Affairs Council/Development formation (FAC/DEV) to maximise common awareness of the worsening debt situation in many countries, she said: “…”.
The EU is leading the way on international partnerships
The funds channelled through the IMF’s Catastrophe Containment and Relief Trust (CCRT) will help 29 of the world’s poorest and most vulnerable countries.
The support will free-up benefitting countries’ resources to increase their social, health and economic spending in response to the COVID-19 crisis.update241120_05_201123_debt_relief_imf_ip_-_draft_press_release_ccrt.pdf
Experience from the first tranche of CCRT relief showed that benefitting countries were able to boost their projected 2020 priority spending by some 1.2 percentage points of GDP; with expenditure on health and social protection increasing, on average, by about a 0.5 percentage point.
Another positive benefit from this short-term liquidity support is that it will also contribute to the countries’ macro-economic stability.
With this new commitment, the EU becomes the largest donor to the CCRT, which currently amounts to USD 505 million.
Low-income countries are facing large short-term liquidity needs, fuelling concerns about a fully-fledged external debt crisis.
The EU, as a global player, can help integrate debt relief into a broader policy dialogue, financing strategies and actions, in order to ‘build back better’.