President of the World Bank Group, Mr. David Malpass and the Managing Direcor of (IMF), Ms. Kristalina Georgieva explained that this was to ensure that Nigeria and other countries do not suffer debt crisis as a result of Covid-19.
The decision was disclosed during a virtual meeting of the IMF/World Bank in Washington Wednesday.
IMF MD, Georgieva, had at a media briefing said that Africa needs $1.3 trillion between now and 2023 to come out of the economic crisis following Covid-19.
She appealed to IMF member countries to assist Africa in granting additional concessionary loanns with low interest to check financing deficit.
The World Bank President, Malpass, also said during the conference, “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.”
“The scale of the challenges ahead is staggering; so, we need to do more. With the strong support of its shareholders, IDA has frontloaded IDA-19 resources to the fullest possible extent as a key part of the surge in our commitments this fiscal year.
“However, IDA lending would have to decline in the next two years even though the latest forecasts, including those just announced by the IMF, suggest that the reduction in economic activity will extend well into subsequent years. We are proposing to IDA Deputies later this month a $25 billion supplemental COVID Emergency Financing Package. We’ll be grateful, as always, for your support.”