The COVID-19 pandemic is taking a huge economic toll in low-income countries. The IMF has provided prompt support to help mitigate it, but it could and should do much more. The political commitment of the international community will be essential for the institution to fulfill its potential.
CGD Policy Blogs
Let’s unpack our arguments for why a debt standstill would be the wrong move for IDA at this point in time.
Even as the COVID-19 curve begins to flatten in the Northern Hemisphere, the developing world is just starting to feel its onslaught. Just as in the United States, where some of the most effective responses to the global pandemic are generated locally, the success of developing countries will also be determined by the actions of local leaders, citizens, and organizations—including fiscal responses.
DFIs are well positioned to address five pressure points in the COVID-19 response that need financing. Let’s unpack these one by one.
Revisiting HIPC as Part of the COVID-19 Response: How did Commercial Debt Relief for Poorest Countries Work Last Time?
The G20 is calling on commercial creditors to follow their lead and extend a moratorium on their debt. But if past is precedent external commercial debt could be shaping up to be major fault line in the debt relief process moving forward.
The coronavirus is spreading and for the first time in history virtually all people on earth are faced with the same, imminent common threat. With multifold stories of individual suffering and an unprecedented global lockdown, there is an intensifying call for an internationally coordinated response; it is in every country’s interest to think and act globally.
Is the crisis a signal on how devastating the great problems confronting our future could be in a world that is not prepared for them, in particular to face challenges such as major inequalities, the climate emergency, and the loss of nature. The way in which our world produces and consumes, calls for a recovery that would also imply a structural transformation towards a more inclusive and sustainable economic model. DBs could be a great contributor to such a transformation.
A Good Idea Executed Badly: Why the World Bank Should Not Renew the Pandemic Emergency Facility Insurance Window
As the coronavirus spreads across the globe and claims an increasing number of victims, calls have been made for the international community to raise and disburse huge sums of money to protect poorer countries, whose poverty and weak health systems make them especially vulnerable.
Calling All Official Bilateral Creditors to Poor Countries: Switch to IDA Concessional Terms as Part of COVID-19 Response
Overall public debt in IDA countries has risen rapidly since before the global financial crisis; and while debt to private creditors (mostly in the form of bonds or bank loans) has increased, the biggest increases have come from multilateral and official bilateral credits.
We are so accustomed to the Chinese government’s lack of transparency that the opaqueness of China’s overseas loans seems unremarkable at this point. But as we face what inevitably looks like a global debt crisis, one that is likely to hit low-income countries particularly hard, a clear accounting of the scale of the problem is critical.