Daily Management Review

Over 300 Leaders From 6 Continents Call On IMF And World Bank To Cancel Debt Of Poor Nations


Over 300 Leaders From 6 Continents Call On IMF And World Bank To Cancel Debt Of Poor Nations
The International Monetary Fund and World Bank were urged by more than 300 lawmakers from various parts of the world on Wednesday to forgo the debt of the poorest countries as a measure to help out such countries because of the novel coronavirus pandemic.  The global financial institutions were also urged to increase funding so that a global economic meltdown could be averted.
There are growing concerns that the economic impact of the pandemic will hit hard developing countries and emerging economies. This call to the two global financial institutions was led by former United States presidential candidate Senator Bernie Sanders and Representative Ilham Omar, a Democrat from Minnesota, US.
According to the latest figures, the coronavirus pandemic has so far infected more than 4.2 million people globally and killed 287,349.
The global economy has been hit hard by the widespread shutdowns implemented by various governments of the world aimed at reducing and slowing down the spread of the novel coronavirus pandemic. It is feared that the weak health systems of the poor countries would be most affected. Further such countries would  also be impacted because of high debt levels and limited resources for the management of this dual crisis for health and economy.
It was “very likely” that the IMF would doing a downward revision of its prediction for global economic growth shrinking by 3 per cent for 2020, said the Fund’s Managing Director Kristalina Georgieva on Tuesday. More than $2.5 trillion in financing will be needed by developing countries to tide over the economic and health impact of the novel coronavirus pandemic, she added.
Every cent available to the poorer countries should be used for the care for their people instead of spending them to service “unsustainable debts” that such countries owe to the large international financial institutions of the world, Sanders said.
He said that cancelling the debt of the poorest countries was “the very least that the World Bank, IMF and other international financial institutions should do to prevent an unimaginable increase in poverty, hunger, and disease that threatens hundreds of millions of people.”
While welcoming the decision of the IMF to do away with need for servicing debt of 25 of the poorest countries for six months, the lawmakers called on the Fund to introduce more efforts to this purpose.
Possible ways to further provide support for the poorest countries will be looked at seriously by the World Bank, the institution has said. it however warned that its credit rating could be affected by waiving debt payments and could also reduce its ultimate capacity to give out low-cost funding to members.
The IMF and the World Bank need to completely cancel debt service obligations of the poorest countries, said parliamentarians from two dozen countries on all six continents in the letter. The lawmakers also urged that the two institutions should not only end their duty by suspending them. This was agreed upon in the meeting of the Group of 20 countries in April.