Nepal To Benefit From Debt Service Relief Amount Rs. 582 Million

Nepal to benefit from debt service relief amounting to EURO 4.299 million (NPR 582 million) through EU contribution to IMF managed CCRT

April 6, 2021, 7:45 a.m.

Kathmandu, 5th April, 2021: Nepal is among 28 countries to receive a debt service relief amounting to EURO 4.299 million (NPR 582 million) through a European Union contribution of EURO 183 million to the ‘Catastrophe Containment Relief Trust (CCRT) set up by the International Monetary Fund (IMF).

The CCRT aims to provide debt service relief on instances of disasters and catastrophes to the poorest and most vulnerable countries.

Jutta Urpilainen, European Commissioner for International Partnerships, said: “Through this contribution to the CCRT, Team Europe continues to stand in solidarity with its most vulnerable partners. In this difficult period, the resources freed up can provide social services for the most vulnerable people, such as access to essential healthcare and education for young people, including girls. Team Europe’s Global Recovery Initiative is working to provide debt relief and sustainable investment for the SDGs.”

“We are happy to share the good news and believe that the debt relief will create a fiscal space enabling Nepal to move to a green, resilient and inclusive recovery from the COVID pandemic,” said EU Ambassador to Nepal, H.E. Nona Deprez.

Ambassador Deprez said that the debt relief for Nepal is in line with the European Commission President, Ursula von der Leyen’s Global Recovery Initiative, which called for linking investments and debt relief to the SDGs

The European Union supports its partner countries in maintaining their commitment and path towards the Sustainable Development Goals despite dire financial situations. Debt levels were already high before the crisis. In many countries, they are becoming unsustainable due to public expenditure required to address the COVID-19 pandemic. More than half of low-income countries are in high risk or already in debt distress.

The European Union alongside the development partners community has been supporting Nepal in its green, resilient and inclusive recovery from the adverse impacts of the pandemic. The announcement of an aid package of Euro 75 million (NPR 9.8 billion) in April last year was a move in the same direction.

Background

The CCRT provides grants to pay debt service owed to the IMF by eligible low-income member countries that are hit by the most catastrophic of natural disasters or battling public health disasters—such as the COVID-19 pandemic.

CCRT-eligible countries are those eligible for concessional borrowing through the IMF's Poverty Reduction and Growth Trust (PRGT) and whose annual per capita gross national income level is below $1,175. Vulnerable countries most seriously affected by the COVID-19 crisis benefit from the CCRT.

The EU, as a global player, can help integrate debt relief into a broader policy dialogue, financing strategies and actions, in order to ‘build back better'.

This €183 million contribution is fully in line with Commission President von der Leyen's proposal for a Global Recovery Initiative that links investments and debt relief to the Sustainable Development Goals.

The beneficiaries of the third CCRT tranche are Afghanistan, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Ethiopia, The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.

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