Nigeria and other poor countries of the will get a debt relief from major lenders and countries.
This is sequel to the resolution reached by China and G-20 countries to give debt relief to the poorest countries in the world which are classified as IDA countries by the World Bank.
The relief assurance is authenticated by comments credited to avid Malpass, the World Bank president, on Friday at the ongoing virtual April 2020 virtual Spring meetings of the World Bank and International Monetary Fund.
Countries under the International Development Association (IDA) are those with per capita income below an established threshold. The 2020 threshold is $1,175.
Countries, such as Nigeria and Pakistan, are IDA-eligible based on per capita income levels and are also creditworthy for some IBRD borrowing. They are referred to as ‘blend’ countries.
“IDA countries will have bilateral debt relief beginning May 1. That way, they can concentrate their resources on fighting the pandemic and its economic and social consequences,” he said.
“I take note that in the G-20 meetings, China is supporting the international agreement to allowing moratorium of debt repayments by IDA countries if they ask for forbearance.
“That’s very important because China is one of the biggest creditors and their participation in that effort is important and was very welcome.”
Malpass said a system will be set up to monitor how developing countries utilise the funds made available by the debt relief.
“So if the government saves money by not paying creditors, there is an expectation that they use it for health, education, economic rebuilding, jobs and concrete ways to help the people of their country,” he said.
“There is also within the debt relief initiative, the idea that there will be monitoring and assessment of the debt sustainability of poor countries.
“That process itself will amount to transparency. That’s going to change the way that countries have been lending into the developing world and it will improve it substantially and there will be a big benefit even to the creditors.
“It’s not the best system for creditors to be making non-transparent loans into poor countries and this is going to improve the system.”
He also said the process will also ensure that developing countries get more grants and concessional loans.