Relief for poor nations welcomed, but it creates a ‘ticking time-bomb’
SDRs, repayment holidays are one thing, mounting interest that sucks up their revenue is another, say experts
Debt experts, charity groups and investors welcomed news on Wednesday that the world’s poorest countries will get new IMF funds and Covid-19 debt relief, but they also cautioned that for some it would still only be a Band-Aid solution.
A new $650bn allocation of the IMF’s quasi currency known as Special Drawing Rights (SDRs) will provide more than $20bn in funding, while an extended repayment holiday on loans from rich G20 nations will temporarily save another $7bn.
The $20bn share of the SDR increase alone is more than all the emergency money the IMF provided to Africa last year and, in relative terms, those under the most serious stress will receive the biggest benefit...