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UN Chief Welcomes IMF And World Bank Measures To Address COVID-related Debt Crisis


The UN Secretary-General on Friday welcomed
steps announced by the International Monetary and
Finance Committee (IMFC) and the World Bank Group
Development Committee, to address debt crises and other
financial distress to economies arising from the COVID-19
pandemic, “as a sign of hope and renewed
multilateralism.”

In a statement
issued via his Spokesperson, António Guterres said
developing economies had struggled to secure enough
financial resources to cope with the onset of the coronavirus
crisis, “let alone to recover from it.”

Since the
beginning of the crisis, the Secretary-General has called
for liquidity, the statement continued, through a large
issuance of Special Drawing Rights (SDRs)
– an instrument created by the International Monetary Fund
to help supplement cash reserves – for those most in need,
and a reallocation of unused SDRs.

Mr. Guterres has
proposed a “three-phased approach to address debt burdens:
a debt standstill, targeted debt relief for the most
vulnerable, and a reform of the international debt
architecture.”

New funds pledge

The
Secretary-General welcomed the IMF
committee’s “concrete calls” for a new allocation of
SDRs, and voluntary reallocations to countries in need. He
said he was encouraged by the support given for the Debt
Service Suspension Initiative (DSSI), which has provided $5
billion in temporary relief for vulnerable countries, and
for the Common Framework for Debt Treatments, agreed by the
G20 economies.

“Debt standstills and relief must be
extended to countries that need it most – including middle
income countries, which are home to more than 60 per cent of
the world’s poor – without creating stigma or
compromising their sovereign ratings”, said the
statement.

Rebuilding debt

Reforming the
international debt architecture is also critical, said the
UN chief noting that a debt crisis amidst the COVID-19
emergency, “would put the Sustainable
Development Goals
out of reach. This week’s
discussions on the international debt architecture are a
major step in the right direction”, he added.

The
Secretary-General called on all countries and institutions
to join in a global effort to “rethink the principles
underpinning today’s debt architecture, and urged action
to “complement existing instruments with more effective
debt crisis resolution mechanisms.”

He expressed
great encouragement over the IMF’s and World Bank’s
emphasis on a sustainable, inclusive, smart and green
recovery.

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