Nepal has been listed among 28 countries to receive debt service relief from a relief package that will be provided through a European Union (EU) contribution of €183 million to the Catastrophe Containment and Relief Trust (CCRT) set up by the International Monetary Fund (IMF). Nepal will receive €4.299 million. The CCRT aims to provide debt service relief for instances of disasters and catastrophes to the most vulnerable countries.
The statement issued by the EU on April 5 reads, “The EU supports its partner countries in maintaining their commitment and path towards the Sustainable Development Goals (SDGs) despite dire financial situations.” Debt levels were already high before the COVID-19 pandemic and in many countries, they are even becoming unsustainable due to the public expenditure required to address the crisis. More than half of low-income countries are at high risk of reaching or are already in debt distress, the statement added.
- The CCRT provides grants to pay debt service owed to the IMF by eligible low-income member countries that are affected by the most catastrophic of natural disasters or that are battling public health disasters such as the COVID-19 pandemic
- CCRT-eligible countries are those that qualify for concessional borrowing through the IMF’s Poverty Reduction and Growth Trust and whose annual per capita gross national income level is below $1,175
- Vulnerable countries that are seriously affected by the COVID-19 crisis will also benefit from the CCRT
- The EU together with 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 €75 million in April last year was a move in a similar direction
- The EU, as a global player, is expected to integrate debt relief into a broader policy dialogue, financing strategies and actions, in order to build back better
- Stating that the CCRT, Team Europe continues to stand in solidarity with its most vulnerable partners, Jutta Urpilainen, European Commissioner for International Partnerships, remarked, “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, she added.
Sharing that the contribution for Nepal from this €183 million contribution is fully 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, Nona Deprez, EU Ambassador to Nepal said, “The inclusion of Nepal in this list for debt relief will create a fiscal space enabling the country to move to a green, resilient and inclusive recovery from the COVID pandemic.”
The beneficiary countries of the third CCRT tranche include Afghanistan, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, the 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.
