No debt relief for Nepal, says IMF

No debt relief for Nepal, says IMF

International Monetary Fund ( IMF ) spokesperson Gerry Rice has said that Nepal will not receive debt relief from a special IMF trust fund that helps poor countries when they face natural disasters.

The IMF ’s Catastrophe Containment and Relief Trust cancelled nearly $100 million in debt owed by Ebola-impacted West African nations.

Jubilee USA Network, a religious development organization, advocated for the trust fund and debt relief for West Africa and Nepal. A powerful earthquake struck Nepal on April 25, killing more than 8,600 people and destroying over 500,000 homes. “This is troubling news,” said Eric LeCompte, a United Nations debt expert and executive director of Jubilee USA Network. “Given the devastation in Nepal, it’s hard to believe that the criteria was not met.”

Nepal is one of 38 low-income countries eligible for relief from the new fund. To qualify for that relief after a natural disaster, an eligible country must meet certain criteria. The disaster must impact at least one-third of the country’s population and either destroy 25 percent of the nation’s productive capacity or cause damage equal to the size of the country’s economy. According to Rice, Nepal met the first condition but the earthquake did not cause enough total economic damage. Nepal’s earthquake and its aftershocks caused $5-10 billion in damage, about one-third of the country’s total economy. However, Rice did not comment on whether or not Nepal’s productive capacity was affected to trigger debt relief under the trust.

“This fund was created for situations just like this, and debt relief in Nepal could make a significant difference,” said LeCompte.? “Beyond the IMF , the World Bank and the Asian Development Bank who hold about $3 billion of Nepal’s debt have unfortunately not announced any debt relief plans yet.”

Nepal owes $3.8 billion in debt to foreign lenders, including $54 million to the IMF and approximately $3 billion to the World Bank and the Asian Development Bank. According to the most recent World Bank numbers, Nepal paid $217 million in debt in 2013, approximately $600,000 in average daily debt payments, or more than $35 million since the earthquake.

On Thursday, Nepal hosted a conference that failed to raise $6.6 billion in needed post-earthquake aid. It’s unclear if any debt relief was a part of the aid money raised.

Source: eKantipur