Low-income countries need debt relief – IMF

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In its latest policy recommendation to countries, the International Monetary Fund (IMF) has said low-income countries (like Nigeria) need access to debt relief, more grants and concessional credit to fight the pulse of heavy debt burden.

IMF managing director, Kristalina Georgieva who made the remarks also said all countries need to deal with debt even though she acknowledged that countries need to boost spending to fight COVID-19 crisis and secure economic recovery.

“But for many low-income countries, urgent action is required now. Given their heavy debt burdens, they are now struggling to maintain vital policy support. They need access to more grants, concessional credit, and debt relief,” Georgieva said.

Minister of finance, budget and national planning, Zainab Ahmed had on Tuesday, said the federal government was not going to accept debt relief package offered by her bilateral/multilateral partners.

While there is tremendous uncertainty around its forecast, IMF projected a partial and uneven recovery in 2021, with growth expected at 5.2 per cent.

In her advice to member states, the IMF MD urged the continuation with essential measures to protect lives and livelihoods. She noted that a durable economic recovery is only possible if countries beat the pandemic everywhere.

“Stepping up vital health measures is imperative. As is fiscal and monetary support to households and firms. These lifelines—such as credit guarantees and wage subsidies—are likely to remain critical for some time, to ensure economic and financial stability. Pull the plug too early, and you risk serious, self-inflicted harm.”

Apart from that, she also asked countries to build a more resilient and inclusive economy. OMF new research shows that public investment—especially in green projects and digital infrastructure—can be a game changer.

According to Georgieva, it has the potential to create millions of new jobs, while boosting productivity and incomes.

She added that more than ever, the world needs strong international cooperation—especially on vaccine development and distribution. “Faster progress on medical solutions could speed up the recovery; it could add almost $9 trillion to global income by 2025. Which, in turn, could help narrow the income gap between poorer and richer nations.”

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