World Bank unveils major new plan to suspend poorest countries' debt

World Bank unveils major new plan to suspend poorest countries' debt

21:39 - The WORLD BANK's creditors are showing "huge willingness" to suspend the poorest countries debt amid the coronavirus pandemic.

The move is in place so the poorest of the world's economy can focus their resources on fighting the deadly coronavirus pandemic.

It comes as the G20 major economies and the G7 were said to be largely supportive of a call by the World Bank and International Monetary Fund for a temporary halt in debt payments.

World Bank Managing Director Axel van Trotsenburg said: “Everybody understands that we need to help the poorest countries.

"There is a huge willingness - as in nobody is questioning that, absolutely nobody.

“I think we are in a good place to move forward.”

The worlds biggest economies will discuss the relief this week.

Sources told Reuters they expected the G20 countries to back a suspension of debt payments at least until the end of the year.

David Malpass, World Bank President, said last week he expected “broad endorsement” by the join Development Committee of the World Bank and IMF this Friday.

The World Bank has already approved billions in emergency funding for 32 countries to respond to the COVID-19 crisis, with decisions on 40 more expected this month.

Mr Van Trotsenburg said it was crucial that commercial creditors also provide debt relief for the poorest countries.

He said: “This is a global problem affecting everybody.

“Unless everybody acts, it will not add up.

“That means every institution has the obligation to see what can it mobilize to the best of its ability, and to be fast.”

The World Bank and the IMF have now begun distributing emergency aid to countries struggling to contain the virus and mitigate its economic impact.

They first issued their call for debt relief on March 25, but China and other G20 nations have not formally endorsed the proposal.

The IMF also announced on Monday a first round of debt relief grants to 25 of its poorest member countries.

The funds will cover those countries’ debt service payments to the Fund for the next six months, but the organisation is pushing donor countries to more than double the $500 million so the debt relief can extend for a full two years.

The IMF-World Bank push for broader bilateral debt relief has won major backing over the past week.

Supporters include Pope Francis and the Institute of International Finance, which represents over 450 global banks, hedge funds and sovereign wealth funds.

IMF-World Bank are urging China and other big creditors to suspend debt payments from May 1 for International Development Association countries that are home to a quarter of the world’s population, and two-thirds of the world’s population living in extreme poverty.

The World Bank estimates those countries face official bilateral debt service obligations of $14 billion through the end of 2020.