IMF, WB urge debt relief for poor nations battling virus

Poor countries will be 'hardest hit, especially ones that were already heavily indebted before the crisis' says Malpass.

The heads of the World Bank and the International Monetary Fund (IMF) underscored the need to provide debt relief to poorer countries hit by the coronavirus pandemic, and said official bilateral creditors would have to play a major role.

The IMF and the World Bank have both launched emergency programmes to offer grants and loans to member countries, with a heavy focus on developing countries and emerging markets, some of which are already in debt distress. They have also called on official bilateral creditors to provide immediate debt relief to the world's poorest countries.

"Poorer countries will take the hardest hit, especially ones that were already heavily indebted before the crisis," the World Bank's president, David Malpass, told the International Monetary and Financial Committee, the steering committee of the IMF. "Many countries will need debt relief. This is the only way they can concentrate any new resources on fighting the pandemic and its economic and social consequences," he said, according to a text of his remarks.

Malpass said the bank had emergency operations under way in 60 countries, and its board was considering the first 25 projects valued at nearly $2bn under a $14bn fast-track facility to help fund immediate healthcare needs. The World Bank was also working with 35 countries to redirect existing resources to address the pandemic, with almost $1bn of those projects already approved. Overall, the bank plans to spend $160bn over the next 15 months, he said.

Malpass said the IMF and World Bank would present a joint plan for debt relief at the institution's virtual Spring Meetings in April, but gave no details. The poorest countries face official bilateral debt service payments of $14bn in 2020, including interest and amortisation payments, Malpass said. Less than $4bn of that total $14bn was owed to the United States and other Paris Club members. China, a major creditor, is not a member of the Paris Club - an informal group of creditor nations working to solve the payment problems faced by debtor nations.

Given the large share of debt held by official bilateral creditors, Malpass said it was critical to ensure their "broad and equitable participation" in addressing the crisis. The IMF's managing director, Kristalina Georgieva, warned that half of the low-income countries were already in "high debt distress" and much would depend on the official creditors.

She said there were already discussions among the world's 20 largest economies, the Group of 20, and in the Paris Club. But she noted there would also be a role for private creditors, as was the case during the global financial crisis of 2008-2009. "The sooner we do it, the better," Georgieva said. "The same way the fund during the global financial crisis brought together both official creditors and private creditors to assess a good pathway through a dramatic crisis, we have to do it this time around as well."

The shock postponement of the Tokyo 2020 Olympics has dealt a savage blow to Japan's hotels and tourism industry, already reeling from the impact of the coronavirus pandemic. Many operators have seen bookings decimated by the virus and had been clinging to the hope that the Games would help them claw back this year's losses.

"This is an enormous shock for us, with sales in many of our member hotels already down by half because of plunging demand for tourism, not only from abroad but also inside Japan due to the coronavirus," said Shigemi Sudo, secretary general of the

Tokyo Hotels and Ryokans Association.

"Many rooms are going to be cancelled, and it will be difficult to fill those empty rooms with new customers given the situation," he said. The delay, which came after weeks of Olympic organisers and officials insisting the sporting extravaganza would go ahead despite the soaring number of virus infections globally, leaves the industry in limbo as they wait for a new date to be set for 2021.

Like the rest of the world, Japan's hotel industry has been devastated by the spread of the coronavirus with bookings down by as much as 90 percent year-on-year in the March-April period, according to a survey by the Japan Tourism Agency. The agency is fielding calls from struggling businesses across the country.