The IMF warns that St Vincent and the Grenadines and other low-income countries face potential economic collapse due to debt distress worsened by the pandemic. As a debt-service suspension initiative nears expiration, the IMF calls for G-20 action to assist these nations in restructuring their debts. The economic outlook remains grim, with forecasts predicting further contractions in 2021 due to pandemic impacts and natural disasters.
The International Monetary Fund (IMF) has issued a warning about the potential economic collapse facing St Vincent and the Grenadines and other low-income nations. Approximately 60% of the world’s poorest countries are either in debt distress or at risk of entering it, according to IMF officials Kristalina Georgieva and Ceyla Pazarbasioglu. Notably, St Vincent and the Grenadines is mentioned alongside nations such as Haiti, Maldives, and Tonga as particularly vulnerable.
A looming expiration of the Group of 20’s debt-service suspension initiative could worsen the situation as rising interest rates make debt servicing increasingly challenging for low-income countries. The IMF emphasizes that “some countries may face economic collapse unless G-20 creditors agree to accelerate debt restructurings and suspend debt service during the negotiations.”
The COVID-19 pandemic has heavily impacted the world’s poorest nations, sending over 100 million individuals into extreme poverty. The emergence of the omicron variant has created additional challenges and waves of infections. The IMF advocates for the G-20 to enhance the common framework aimed at loan restructuring, a plan that has faced delays and limited participation since its launch in November 2020.
As the debt relief program approaches its expiration, the IMF has highlighted the urgency for quick action to restore confidence in the framework and support countries facing rising debt challenges. The IMF’s July 2021 report indicates that St Vincent and the Grenadines’ economy contracted by 3.8% in 2020, primarily due to a 70% drop in tourism. Furthermore, predictions for 2021 indicate a further contraction of 6.1%, exacerbated by the impact of the La Soufrière volcanic eruption on agriculture and related sectors.
The IMF’s warnings outline significant risks for St Vincent and the Grenadines and similar low-income nations as they face potential economic collapse due to debt distress exacerbated by the pandemic and rising interest rates. Urgent reform and support from the G-20 are necessary to mitigate these risks and provide a pathway for recovery.
Original Source: wicnews.com
