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IMF urges G20 to extend debts relief for countries to avoid ‘economic collapse’

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World Bank, IMF, Paris Club, G20 agree to suspend debt service

The International Monetary Fund I(MF) has called on advanced economies in the G20 to extend and improve their debt relief initiatives, warning that many countries face a dire crisis without the help.

In a blog post on Thursday, IMF chief Kristalina Georgieva said, “We may see an economic collapse in some countries unless G20 creditors agree to accelerate debt restructurings and suspend debt service while the restructurings are being negotiated,” adding that it was critical that private creditors also offer relief.

According to her, the G20 Debt Service Suspension Initiative (DSSI) expires at the end of the year, and without a renewal, countries could face financial pressure and spending cuts, just as new Covid-19 variants are spreading, while interest rates are expected to rise.

Read also: IMF urges Nigeria to remove fuel subsidy early 2022

“Debt challenges are pressing and the need for action is urgent. The recent Omicron variant is a stark reminder that the pandemic will be with us for a while,” Georgieva said.

Meanwhile, given the problems with the debt relief programme and the common framework for dealing with private creditors, only three countries so far have applied for relief — Chad, Ethiopia and Zambia — and they have faced “significant delays.”

“The framework has yet to deliver on its promise. This requires prompt action,” she added.

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