The World Bank is in talks with the International Monetary Fund (IMF) with a view to offering debt reduction to Nigeria and other member countries of the International Development Association reeling from the coronavirus crisis.
David Malpass, president of the World Bank Group, made the declaration on Wednesday at the ongoing annual meetings of the IMF/World Bank in Washington.
“The tendency in past debt crises is for countries in debt distress to go through a series of ineffective debt rescheduling that leaves them weaker. Creditors may eventually allow them to get to a debt reduction process, but at a tremendous cost to the poor. We need to work better and faster this time.
“While there’s been G20 discussion of a common framework on debt treatment, it’s important that it not just kick the can. Given the urgency of the debt crisis, the IMF and World Bank have proposed that we undertake a joint action plan on debt reduction for the most indebted IDA countries. We’ll discuss it this week with governors during our annual meetings. It’s urgent to make rapid progress on a framework because the risk of disorderly defaults is rising,” Mr Malpass said.
He observed that the enormity of the challenges ahead is huge, saying IDA, backed by its shareholders, has frontloaded IDA-19 resources to the fullest possible length as an integral component of the rise in its commitments in the current fiscal year.
Meanwhile, IMF Managing Director Kristalina Georgieva at a separate media briefing said the consolidated funding required for Africa between now and 2023 to deal with the coronavirus crisis would be in the region of $1.3 trillion.
She enjoined IMF members to grant further concessionary loans and low-interest financing to support Africa’s plan to bridge funding gap.
“The continent of Africa is being severely hit and as a result over the next years between now and 2023 – $1.3 trillion financial gap and that is what Africa needs. Out of this, as of today, we still do not know how we would fill $245 billion.
“We have to make it possible raise resources for Africa with Africa and for that, we need the African countries themselves to concentrate on ambitious reforms to make themselves more attractive for investment from the private sector and also to be more capable to mobilise domestically finances for the recovery from the crisis for growth in the future. We also need the international partners of Africa to do more,” she said.