Debt Cancellation: IMF Ignores President Buhari's Request, Reveals Plan For African Countries

The International Monetary Fund (IMF) has ignored President Muhammadu Buhari's request for an outright cancellation of debt, opting for another option as IMF Managing Director, Kristalina Georgieva reveals plan to protect African countries whose economy has been adversely affected by the coronavirus outbreak.

Allnews had reported that President Buhari urged international financial institutions to cancel debt obligations considering the impact of COVID-19 on countries, during a virtual summit with other heads of states from the Non-Aligned Movement (NAM). NAM is the largest grouping of states globally after the United Nations.

No debt cancellation for President Buhari

But while disclosing the plans of IMF for affected countries, Georgieva said IMF is leading the effort for a debt standstill, stating that if a country's economy is standstill - as it has been under lockdown due to COVID-19 - then debt servicing should also be paused. She said the resolution was reached with the World Bank President, David Malpass.

So, while President Buhari wants the debt of countries to be cancelled, IMF and the World Bank, the biggest creditors of Nigeria, prefer to pause repayment or debt servicing pending the recovery of the economy, "We led the effort to come with debt standstill for official billateral creditors, and of course, we call on the private sector to also join in. When the economy is standing still, debt service should also standstill." She said while speaking with CNBC.

IMF's plan for Africa amidst coronavirus outbreak

While elaborating on the plan of IMF for African countries, Georgieva said the IMF's aim is to get some $18 billion into the hands of policy makers and rapidly flowing in support of the economy. She said providing emergency financing and increasing level of capital is one of the two things IMF is doing for Sub-Saharan Africa - the second being debt standstill.

The emergency fund will have a long due date for repayment, "We mobilise debt relief for countries with lower income; twenty-three countries are able to not pay us for the next six months, and most likely, we would extend that to two years." Georgieva said.

Nigeria has already received its emergency loan from IMF, requesting 100% of its portion from IMF. FG obtained $3.4 billion, making Nigeria's emergency fund the largest in Sub-Saharan region.