The International Monetary Fund (IMF) has taken extensive measures to facilitate the poorest countries during the COVID-19 pandemic. On Monday, the IMF declared that it would extend its relief period and give a chance to 28 of the poorest countries to fulfill their debt payments at a later stage. This recent development comes in light of the terrible conditions brought by the pandemic, as cited by the US Treasury Secretary, Janet Yellen.
According to Yellen, the pandemic would destroy poor nations if the developed countries do not provide support and financial assistance. She claimed that approximately 150 million people can be pushed into extreme poverty if they aren’t given the resources to cope up with the global pandemic.
Her call for extending the relief period is meant to provide poor countries a breathing space in these increasingly difficult times. The payments will be paused to ‘continue to help free up scarce financial resources for vital emergency health, social and economic support to curb the impact of the pandemic.
Also, the remaining debt payments that are supposed to be paid to the IMF will be compensated through its “Catastrophe Containment and Relief Trust.” This fund can provide sufficient funding for countries in event of natural calamities and other disasters. Once again, the IMF has appealed to countries to contribute to this fund. If wealthy countries are to donate to the fund, the relief period can be extended till April 2022. Not only would this be an achievement on part of the IMF, but it would also be in the best interest of the poor countries that are struggling to cope up with the pandemic.
The U.S aims to go far and beyond in providing a helping hand to other nations through the “Special Drawing Rights” (SDRs). However, this notion was vehemently opposed by the vast majority of Republicans, including Senator John Kennedy who claimed that it was completely nonsensical as only a portion of the SDR’s fund goes to the poorest countries.
The decision regarding the allocation of the SDRs is yet to be finalized. However, it is important to note that most developing countries have been finding it difficult to counter the pandemic. Given the lack of financial resources, the struggle for them hasn’t been easy and it would still take a lot of time for them to recover as compared to wealthier nations.
Due to the aforementioned circumstances, Yellen had asked the IMF to extend the COVID-19 relief plan. Moreover, she has also called countries to gather and unanimously agree on a corporate tax rate.
