The International Monetary Fund (IMF) has announced debt relief for 25 nations around the world to help them cushion the effects of coronavirus pandemic. The executive board of the monetary body approves the immediate debt relief for these countries in the wake of the COVID-19 outbreak that has brought the world’s economy to its knee, and exposed vulnerable countries, especially in Africa, to alarming economic hardship.
Ms. Kristalina Georgieva, Managing Director of the IMF, said the provision is for the poorest among its member countries, and part of its Catastrophe Containment and Relief Trust (CCRT) response for poor countries affected by the pandemic.
“Today, I am pleased to say that our Executive Board approved immediate debt service relief to 25 of the IMF’s member countries under the IMF’s revamped Catastrophe Containment and Relief Trust (CCRT) as part of the Fund’s response to help address the impact of the COVID-19 pandemic.
“This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources toward vital emergency medical and other relief efforts.
“The CCRT can currently provide about US$500 million in grant-based debt service relief, including the recent US$185 million pledge by the UK, and US$100 million provided by Japan as immediate resources. Others, including China and the Netherlands, are also stepping forward with important contributions. I urge other donors to help us replenish the Trust’s resources and boost further our ability to provide additional debt service relief for a full two years to our poorest member countries,” she said.
The countries in line to benefit from the debt service relief include 20 African nations. They are as follows: 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, Sao Tome and Principe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.
It came as a surprise that Nigeria was excluded in the list as it is battling to contain a daily increasing number of the coronavirus cases. It could be recalled that Nigeria’s former finance minister Ngozi Okonjo-Iweala and former president, Olusegun Obasanjo, had moved the quest for debt relief for poor African countries.
The duo called on the G20 nations to waive 2020’s debt repayment for poor countries, including $44 billion expected from African countries. In the letter addressed to the G20 members, Obasanjo and Iweala asked the international community to remember how the world survived the economic crunch of 2008-2010, and apply the same technique now.
“In 2008-2010, the immediate economic crisis could be surmounted when the economic fault line-under-capitalization of the global banking system was tackled. Now however, the economic emergency will not be resolved until the health emergency is effectively addressed: the health emergency will not end simply by conquering the disease in one country, but by ensuring recovery from COVID-19 in all countries,” the letter reads partly.
Nigeria is the country with most poor people in the world, a major criterion for debt relief. Therefore, the West African country’s exemption from CCRT amnesty has instigated curiosity.
Many believe it is due to habitual practice of borrowing by the Nigerian government. Since November 2019 till now, the federal government of Nigeria has made several attempts to make external borrowing, especially from the IMF and the World Bank. There was the $29.96 billion notorious loan request in November, and the $22.7 billion that was suspended in March due to opposition, and $6.9 billion it planned to borrow from multilaterals lenders earlier in the month of April.
Each of these attempts to borrow has attracted wide condemnation. Dissenting voices had called it “reckless and unjustifiable.”
The former Vice President Atiku Abubakar berated the government’s last attempt to borrow from foreign governments. He asked the Nigerian government to look inward to solve its problems as every country around the world has the same worry to contend with right now.
“As it stands today, the world is too preoccupied with its challenges to prioritize Africa, and so we have to prioritize ourselves. The issue of Nigeria wanting to borrow $6.9 billion at this time shows the almost delusory state of our government. No one has that type of money to throw about.
“Why is it that the Nigerian government is always quick to want to borrow at every instance? It shows a lazy mindset and an inability to take those sacrifices necessary to get the economy into shape. Worse still, it proves that we do not, as of yet, have the ability to think outside the box for genuine solutions.
“We cannot be looking to borrow huge sums at the same time our officials are taking delivery of foreign made luxury cars. We cannot be considered a serious country when we refuse to cut down on profligacy and instead seek outside help to fund our inefficiencies,” Atiku said.
Many believe that it’s time Nigeria begins to cut down on loans, reduce wastage and lax on judicious use of scarce funds. It is also believed that the government needs to generate ideas to diversify the economy.