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| Boots have been washed and hung out to dry to prevent the spread of Ebola in a clinic in Monrovia, Liberia. Photograph: AP |
The three countries stricken by Ebola have been granted debt relief of about $100m (£65m) by the International Monetary Fund, which has been under pressure to relieve the financial burden on Guinea, Liberia and Sierra Leone.
The IMF also urged other international lenders to the countries to take similar action as it established a catastrophe containment relief trust to provide grants to countries suffering epidemics and other natural disasters.
The trust will provide the money to Liberia, Sierra Leone and Guinea so they can pay off debt to the IMF. The IMF also offered the west African states $160m of new interest-free loans.
Christine Lagarde, the IMF’s managing director, said: “[The trust] aims at enhancing our support to the countries in Africa hit by Ebola, as well as other low-income countries that may be affected by public health disasters in the future. This is a strong example of the IMF demonstrating flexibility and innovation in responding to the needs of our global membership.”
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| IMF managing director Christine Lagarde, who says the organisation is ‘demonstrating flexibility and innovation in responding to the needs of our global membership’. Photograph: AFP/Getty |
More than 8,000 people have been killed by the virus, which has put already weak health systems in Guinea, Liberia and Sierra Leone under severe strain. The first case occurred in December 2013 but a diagnosis was not made until March 2014 while the World Health Organisation declared the situation to be an emergency in August.
The Washington-based IMF has faced pressure from the US to provide debt relief to the three countries, which have been battered by the epidemic.
But while debt campaigners welcomed the move, there was concern about the strain that would be put on them by new loans being granted.
According to campaigners, the debt of Guinea, Liberia and Sierra Leone to the IMF will increase from $410m to $620m over the next three years, because of the $415m of new loans granted before the announcement.
“The cancellation of debt payments coming due over the next two to four years is a welcome step in helping with the impact of Ebola,” Tim Jones, policy officer at Jubilee Debt Campaign, said. “But the lending of more money means that Guinea, Liberia and Sierra Leone’s debt will actually increase. Grants should be given to cope with the impact of Ebola, not more loans which leave an unjust debt to be repaid over the next decade.”
He called on the World Bank to cancel debts too: “The three countries are due to pay $11 m to the World Bank over the next year. For the World Bank to demand that this money is paid would be scandalous,”
The Jubilee Debt Campaign estimated Guinea would be spared $30.2m of payments between now and September 2019, Liberia $36.4m until November 2018, and Sierra Leone $29.2m until December 2016.
The World Bank has estimated that the three countries will lose at least $1.6bn in foregone economic growth as a result of the epidemic, which experts hope is starting to be contained as a result of safer burial practices and earlier detection of cases.
Guinea has said it will bolster the proportion of its budget spent on the health system if its debt is cancelled, which could release around $45m annually.
The president of Guinea, Alpha Condé, took his call for relief from the IMF to the Davos meeting of the World Economic Forum last month where he met Lagarde and the World Bank president, Jim Kim.
In November, the IMF provided $300m of extra funding to fight the disease in the three countries through “a combination of concessional loans, debt relief, and grants”.
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| A nurse administers an injection to a participant in an Ebola vaccine trial in Monrovia. Photograph: John Moore/Getty Images |
The UK government announced extra assistance for Sierra Leone’s economy, which has been hit hard by the Ebola epidemic. The government’s CDC investment fund and Standard Chartered, the international bank, will make up to $50m of short-term loans to businesses struggling to raise finance. CDC will share half the risk of the loans and overdrafts provided by Standard Chartered.
Justine Greening, the UK development secretary, said: “Business and private enterprise are crucial to help Sierra Leone recover the rapid growth rates it was experiencing only a year ago. This new agreement will ensure businesses get the finance they need to grow and create more jobs.”
source: theguardian
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