The President of the World Bank Group, Mr. David Malpass, has said he is in talks with the Managing Director of the International Monetary Fund (IMF), Ms. Kristalina Georgieva on how to provide debt reduction and succour to Nigeria and other International Development Association (IDA) countries that had been hit by the COVID-19.
The plan is to ensure that COVID-19 doesn't plunge the IDAs into debt crisis.
Malpass disclosed this during a virtual media briefing yesterday at the ongoing Annual Meetings of the IMF/World Bank in Washington.
Also at a separate media briefing, the Managing Director, IMF, Georgieva, estimated that the cumulative funding needed for Africa between now and 2023 to get out of the COVID-19 health and economic crisis would be about $1.3 trillion.
She also urged IMF member-countries to grant additional concessionary loans and low-interest financing to Africa to aid the continent bridge the financing deficit.
Speaking about an impending global debt crisis, Malpass said: "The tendency in past debt crises is for countries in debt distress to go through a series of ineffective debt rescheduling that leaves them weaker. Creditors may eventually allow them to get to a debt reduction process, but at a tremendous cost to the poor. We need to work better and faster this time.
"While there's been G20 discussion of a common framework on debt treatment, it's important that it not just kick the can. Given the urgency of the debt crisis, the IMF and World Bank have proposed that we undertake a joint action plan on debt reduction for the most indebted IDA countries. We'll discuss it this week with governors during our annual meetings. It's urgent to make rapid progress on a framework because the risk of disorderly defaults is rising."
He added: "The scale of the challenges ahead is staggering; so, we need to do more. With the strong support of its shareholders, IDA has frontloaded IDA-19 resources to the fullest possible extent as a key part of the surge in our commitments this fiscal year.
"However, IDA lending would have to decline in the next two years even though the latest forecasts, including those just announced by the IMF, suggest that the reduction in economic activity will extend well into subsequent years. We are proposing to IDA Deputies later this month a $25 billion supplemental COVID Emergency Financing Package. We'll be grateful, as always, for your support."
He further said the bank had approved $12 billion for COVID-19 vaccines.
He said: "On a positive note, I am happy to announce that yesterday afternoon, our board approved a package of up to $12 billion to expand our fast-track COVID response for the purchase and distribution of COVID-19 vaccines, tests and treatments."
While responding to questions on what was needed for countries in Africa return to the path of economic growth, Georgieva said: "The continent of Africa is being severely hit and as a result over the next years between now and 2023 - $1.3 trillion financial gap and that is what Africa needs. Out of this, as of today, we still do not know how we would fill $245 billion.
"We have to make it possible raise resources for Africa with Africa and for that, we need the African countries themselves to concentrate on ambitious reforms to make themselves more attractive for investment from the private sector and also to be more capable to mobilise domestically finances for the recovery from the crisis for growth in the future. We also need the international partners of Africa to do more.
"The fund in the last six months has done 10 times more than what we do in an average year.
We have provided to the continent of Africa $26 billion in emergency financing and other types of financing and of this, close to $16 billion went to Africa."