IMF’s Debt Relief Begins
March 31st, 2009 at 10:01 pm - by Tom Prout
With the G20 summit due to commence in London just under two days from now, the revelation that the International Monetary Fund (IMF) will write off $3 billion of the Ivory Coast’s $12.8 billion national debt clarifies the agency’s approach for the finance talks on April 2nd. A proposed increase of the IMF’s lending capacity to $500 billion is set to be discussed at the G20 summit, and a vote in favour of passing the motion would see a dramatic rise in the amount of debt relief issued to emerging and developing economies.
The decision to write off almost 25% of the Ivory Coast national debt is part of the Heavily Indebted Poor Countries Initiative, and has earned the praise of President Laurent Gbagbo. On March 27th, the IMF approved a loan of $565 million to the Ivory Coast; attached were strict regulations on financial transparency and national poverty measures. A 2002 armed rebellion in the country has had long-lasting effects which have yet to be fully rectified, though it is hoped that a resolution is fast approaching.
Should the Group of 20 (G20) developed and developing economies agree to double the IMF’s lending capacity, it is expected that a large number of similar initiatives will occur in order to boost emerging economies out of the current financial crisis.
