IMF hopeful on debt service break extension

The International Monetary Fund (IMF) has said it is hopeful that its board of directors will approve a debt repayment breather extension for Malawi beyond October 2021.

On April 1 this year the IMF Executive Board approved a debt repayment breather for Malawi and other 27 poorest countries under the Catastrophe Containment and Relief Trust (CCRT) up to October 15 this year.

The debt service break under CCRT is designed to help free up scarce financial resources for vital emergency health, social, and economic support to mitigate the impact of the Covid pandemic.

The IMF Board observed in April this year that, subject to the availability of sufficient resources in the CCRT, debt service relief could be provided for the remaining period through from October 16 2021 to April 13 2022 amounting to a total of about SDR 680 ($964) million.

Briefing reporters in Lilongwe on Monday, IMF Director of Africa Department Abebe Aemro Selassie said he is optimistic that the IMF Executive Board would nod to the extension of the debt servicing breather for Malawi.

“We hope that Malawi would get relief on debt repayment until April and we hope the board will consider this very soon and hopefully we should be able to mobilise enough resources so that repayments up to December 2022 could be offset, but we are not there yet,” Selassie said.

Minister of Finance, Felix Mlusu, who attended the media briefing, could not comment on the possible extension of the debt service breather.

The CCRT allows the IMF to provide grants for debt relief for the poorest and most vulnerable countries hit by catastrophic natural disasters or public health disasters.

The relief on debt service payments frees up additional resources to meet exceptional balance of payments needs created by the disaster and for containment and recovery.

Established in February 2015, the CCRT grants complement donor financing and the IMF concessional lending through the Poverty Reduction and Growth Trust.

In April last year, IMF Managing Director Kristalina Georgieva urged donors to help us replenish the Trust’s resources and boost further the IMF’s ability to provide additional debt service relief for a full two years to our poorest member countries.

The IMF is currently Malawi’s second largest external creditor after the World Bank through the International Development Association.

SOURCE: THE TIMES GROUP