World Bank, IMF call on G20 to offer debt relief for poorest countries

The Group of Twenty (G20) has been urged to offer debt relief for the poorest countries to help them tackle challenges posed by Covid-19.

The World Bank and International Monetary Fund (IMF) on Wednesday jointly called on the countries to help those nations with immediate liquidity needs. 

The coronavirus outbreak is "likely to have severe economic and social consequences" for the poorest countries, which draw on the World Bank's International Development Association (IDA), the two multilateral lenders said in a statement issued to the G20. 

"With immediate effect - and consistent with national laws of the creditor countries - the World Bank Group and the International Monetary Fund call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance," the statement read.

"This will help with IDA countries' immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country."

Created in 1999, the G20 is a central forum for international co-operation on financial and economic issues.

It comprises 19 countries, plus the European Union. The countries are Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey and the United States. 

Unsustainable debt

The two multilateral lenders also invited G20 leaders to task their institutions with making these assessments, including identifying the countries with unsustainable debt situations, and to prepare a proposal for comprehensive action by official bilateral creditors to address both the financing and debt relief needs of IDA countries. 

They said they will seek endorsement for the proposal at the Development Committee, the joint ministerial committee of the boards of governors of the World Bank and the IMF, during the spring meetings scheduled for April 16-17.

The World Bank and IMF believe "it is imperative" at this moment to provide a global sense of relief for developing countries, as well as a strong signal to financial markets, the statement read. 

World Bank Group President David Malpass said the pandemic will likely hit the poorest countries the hardest.