IMF Gives Ebola-Hit Countries $100 Million in Debt Relief | Debt relief

The three Ebola-stricken countries have won around $100m (£65m) in debt relief from the International Monetary Fund, which has come under pressure to ease the financial burden on Guinea, Liberia and Sierra Leone.

The IMF has also urged other international lenders to countries to take similar action by establishing a Disaster Containment Relief Trust to provide grants to countries suffering from epidemics and other natural disasters.

The trust will provide the money to Liberia, Sierra Leone and Guinea so that they can repay their debt to the IMF. The IMF has also offered West African states $160 million in new interest-free loans.

Christine Lagarde, Managing Director of the IMF, said:[The trust] aims to strengthen our support to the countries Africa affected by Ebola, as well as other low-income countries that may be affected by public health disasters in the future. It is an excellent example of the IMF’s flexibility and innovation in responding to the needs of our members around the world.

IMF chief executive Christine Lagarde said the organization is “flexible and innovative in responding to the needs of our members around the world”. Photography: AFP/Getty

More than 8,000 people have been killed by the virus, which has put already weak health systems on edge. Guinea, Liberia and Sierra Leone under heavy pressure. The first case occurred in December 2013 but the diagnosis was only made in March 2014 when the World Health Organization declared an emergency in August.

The Washington-based IMF has come under pressure from the United States to provide debt relief to the three countries, which have been battered by the outbreak.

But while debt campaigners welcomed the move, they worried about the pressure that would be placed on them by the granting of new loans.

Guinea, Liberia and Sierra Leone’s debt to the IMF will rise from $410 million to $620 million over the next three years, activists say, due to $415 million in new loans granted before the announcement.

“The cancellation of debt payments coming due over the next two to four years is a welcome step to help with the impact of Ebolasaid Tim Jones, policy manager at Jubilee Debt Campaign. “But lending more money means that the debt of Guinea, Liberia and Sierra Leone will actually increase. Grants should be given to deal with the impact of Ebola, not more loans that leave unfair debt to be repaid over the next decade.

He called on the World Bank to also cancel the debts: “The three countries must pay $11 million to the World Bank over the next year. For the World Bank to require this money to be disbursed would be outrageous,” he added.

The Jubilee Debt Campaign estimated that Guinea would be spared $30.2 million in payments by September 2019, Liberia $36.4 million through November 2018 and Sierra Leone $29.2 million. dollars until December 2016.

The World Bank has estimated that the three countries will lose at least $1.6 billion in lost economic growth due to the outbreak, which experts hope is beginning to be contained through safer burial practices and to earlier case detection.

Guinea said it would increase the proportion of its budget spent on the health system if its debt was canceled, which could free up about $45 million a year.

Guinea’s President Alpha Condé took his plea for IMF help to the Davos meeting of the World Economic Forum last month where he met with Lagarde and World Bank President Jim Kim.

In November, the IMF provided $300 million in additional funding to fight the disease in the three countries through “a combination of concessional loans, debt relief and grants”.

Ebola vaccine trial
A nurse administers an injection to a participant in an Ebola vaccine trial in Monrovia. Photography: John Moore/Getty Images

The British government has announced additional aid for the economy of Sierra Leone, which has been hit hard by the Ebola outbreak. The government’s CDC investment fund and Standard Chartered, the international bank, will provide up to $50 million in short-term loans to companies struggling to raise funds. CDC will share half the risk of loans and overdrafts made by Standard Chartered.

Justine Greening, UK Development Secretary, said: “Business and private enterprise are crucial in helping Sierra Leone return to the rapid growth rates it enjoyed just a year ago. This new agreement will allow companies to obtain the financing they need to grow and create more jobs.

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