IMF, World Bank call on creditors to defer debts

Global leaders have joined the World Bank and the International Monetary Fund (IMF) in a call to the Group of 20 (G20) major economies to hold off this year's debt interest payments to them by poor and developing countries amid worsening economic fallout from the Covid-19 pandemic.

Should the debt payment freeze be accepted, Kenya stands to keep hold of up to Sh243 billion in deferred payments to both bilateral and commercial lenders.

The 165 past and present world leaders, whose include 92 former Presidents and Prime Ministers, also want the major economies to consider future debt relief for the poor countries to stem further fallout from the pandemic.

“The international community should waive this year’s poorer countries’ debt repayments, including $44 billion due from Africa, and consider future debt relief to allow poor countries the fiscal space to tackle the health and economic impact of the COVID-19 pandemic,” they said in a letter to the G20.

“We agree with African and developing country leaders that given the existential threat to their economies, the increasing disruption to livelihoods and education and their limited capacity to cushion people and companies, that at least $150 billion of overall support will be needed for health, social safety nets, and other urgent help.”

The World Bank and the IMF in a separate message asked the rich economies to suspend the collection of debt interest from developing nations to prevent a new debt crisis for the world’s poorest countries as the coronavirus outbreak escalates. The World Bank has projected Sub-Saharan Africa will this year suffer its first recession for 25 years as a consequence of the outbreak.