Review sought for debt risks in middle-income countries

MANILA, Philippines — The World Bank and the International Monetary Fund (IMF) have been urged to look into challenges faced by middle-income countries in debt repayment and come up with solutions to alleviate debt stress as they cope with economic fallout from the new coronavirus pandemic.

This was contained in the communiqué of the Joint Ministerial Committee of the Boards of Governors of the World Bank and the IMF on the Transfer of Real Resources to Developing Countries (Development Committee) drawn during its virtual meeting on Friday as part of the WB/IMF Spring Meetings 2020.

This came after earlier initiatives by the World Bank Group (WBG) to frontload grants and concessional support for the world’s poorest countries at the time of the pandemic.

WBG and the IMF also earlier called on G20 nations to suspend debt payments for poorer countries, such as those qualifying for low-cost loans from the International Development Association (IDA) resources.

The committee recognized that the pandemic can undo development gains for many countries if no interventions are done to support immediate economic needs and long-term development priorities.

“This crisis has the potential to erase development gains for many countries. The WBG must not only address immediate economic needs, but also support long-term development priorities; ensuring affordable energy access, building energy security and resilience to economic and environmental vulnerabilities and climate change.”

The World Bank classifies the Philippines as a lower middle income economy having a gross national income (GNI per) capita of $3,830 as of 2018. The country is eligible for loans at regular terms having graduated from IDA in 1993.

Finance Secretary Sonny Dominguez said the Philippines would continue to pay its debts even as it responds to the COVID-19 pandemic so as not to damage its credibility among international creditors.