IMF Managing Director, Kristalina Georgieva
The Executive Board of the International Monetary Fund (IMF) approved on December 15, 2021 a fifth and final tranche of debt service relief under the Catastrophe Containment and Relief Trust (CCRT) for 25 member countries with eligible debt service falling due to the IMF from January 11 to April 13, 2022.
The approval of the fifth tranche, totaling approximately SDR 82.1 million (about US$115 million), follows four prior tranches approved on April 13, 2020, October 2, 2020, April 1, 2021, and October 6, 2021 (see Press Releases 20/165 , 20/304 , 21/99 , 21/291 ) and helps free up scarce financial resources for vital health, social, and economic support to mitigate the impact of the COVID-19 pandemic. The tranche completes the two-year COVID-related debt service relief first approved on April 13, 2020, totaling a cumulative debt service relief of about SDR 690 million (US$ 964 million).
In March 2020, Managing Director Kristalina Georgieva launched an urgent fundraising effort to raise SDR 1 billion (US$1.4 billion) in grants for the CCRT. This would enable the CCRT to provide financial assistance for COVID-related relief on debt service for up to a maximum of two years, while leaving the CCRT adequately funded for future needs. So far, donors have pledged contributions totaling about SDR 609 million (about US$852 million), including from the European Union, the UK, Japan, Germany, France, the Netherlands, Spain, Switzerland, Norway, Singapore, Greece, China, Mexico, the Philippines, Sweden, Bulgaria, Luxembourg, Malta, and Indonesia.
Executive Board Assessment
Executive Directors endorsed staff’s proposal for the approval of the fifth and final tranche of COVID-related debt service relief for beneficiary countries under the Catastrophe Containment and Relief Trust (CCRT) for the remaining two-year period through April 13, 2022.
Directors noted that CCRT grants for debt service relief on obligations to the Fund falling due from April 14, 2020 through January 10, 2022 have helped its poorest and most vulnerable members to free up resources to tackle the pandemic and its repercussions. They encouraged CCRT-eligible countries to continue making progress on implementing governance safeguards commitments regarding COVID-19 related spending, and reiterated the importance of transparency and accountability. Directors also welcomed the transition to upper credit tranche-quality programs by some CCRT-eligible members, which provide a stronger policy framework for the recovery period, and looked forward to further progress in this area.
Directors appreciated the generous support from 18 Fund members and the EU that have helped finance this support. They noted, however, that total grant pledges received to date of about SDR 609 million are short of the cost of the full two-year COVID-related debt service relief, and well short of the SDR 1 billion fundraising target.
Director acknowledged that the approval of the fifth tranche will severely reduce the CCRT’s pre-COVID cash buffer and potentially limit the CCRT’s capacity to provide relief in future emergencies. They considered, however, that on balance there is a compelling case for approval of the tranche in light of the continuing human and economic toll of the pandemic. Directors thus agreed on the urgent need for continued fundraising efforts to address the CCRT’s underfunding. In light of simultaneous financing requests from the Fund, Directors encouraged a more coordinated approach to fundraising to help donors better understand and prioritize the various efforts underway.
Directors looked forward to the comprehensive review of the CCRT planned for FY2023, including a discussion of access rules and the financing framework to ensure the sustainability of the Trust going forward. To manage underfunding risks, many Directors saw merit in an earlier review, while being mindful of the heavy workload facing staff.
