Warning over impact of new IMF loans to Ebola affected countries

Sierra Leone Telegraph: 6 February 2015

salone poverty2Reacting to the announcement by the IMF that it will cancel almost $100 million of debt owed by Guinea, Liberia and Sierra Leone, whilst lending $160 million in new loans, Tim Jones, Policy Officer at Jubilee Debt Campaign said:

“The cancellation of debt payments coming due over the next two to four years is a welcome step in helping with the impact of Ebola. But the lending of more money means that Guinea, Liberia and Sierra Leone’s debt will actually increase. Grants should be given to cope with the impact of Ebola, not more loans which leave an unjust debt to be repaid over the next decade.”

Abu Bakarr Kamara from the Budget Accountability Network in Sierra Leone said:

“This is good news .The debt relief by IMF is a welcome one for Sierra Leone. However, the devastation caused by Ebola on our health system requires sustained and progressive investment in the health sector for the next five years. Cancelling all Sierra Leone’s debt would contribute greatly to improve our health systems hence contributing towards achieving the Millennium Development Goals.”

The debt of Guinea, Liberia and Sierra Leone to the IMF will increase from $410 million to $620 million over the next three years, despite this debt cancellation, because of new loans. The IMF has made almost $9 billion in surplus from its lending over the last three years, which is sitting unspent in its reserves.

salone poverty1Tim Jones from Jubilee Debt Campaign said: “The IMF can easily afford to cancel all the $620 million debt of Guinea, Liberia and Sierra Leone which will remain. It should do so. Moreover, other lenders should also cancel debts owed to them. The three countries are due to pay $11 million to the World Bank over the next year. For the World Bank to demand that this money is paid would be scandalous.”

The announcement is implementing a G20 commitment made in November 2014 to provide $300 million of additional “debt relief, grants and loans” to Guinea, Liberia and Sierra Leone through the IMF. In reality, the total debt relief and loans that have been announced total only $260 million.

The IMF is creating a new scheme for cancelling debts of low income countries suffering from a health pandemic. Under the scheme, countries which qualify get an amount of debt payments cancelled (20% of their quote at the IMF). The debt payments cancelled are those coming due to be paid soonest.

Based on the IMF announcement, Jubilee Debt Campaign estimates that the debts cancelled for each country will be:

Guinea $30.2 million of payments between now and September 2019

Liberia $36.4 million of payments between now and November 2018

Sierra Leone $29.2 million of payments between now and December 2016

The current debt of Guinea, Liberia and Sierra Leone to the IMF is $410 million. A further $145 million of loans has also been already committed ahead of today’s announcement.

The additional loans announced today take the total potential debt up to $715 million. $95 million of debt cancellation takes this down to $620 million of debt remaining.

Source: Jubilee Debt Campaign

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