IMF warns of an economic fall down in St Vincent and the Grenadines – WIC News

The International Monetary Fund (IMF) warned that St Vincent and the Grenadines and several other low-income countries including Haiti is expected to face an “economic collapse” unless creditors in the world’s wealthiest nations suspend debt service obligations and assist in negotiating new terms.
Around 60% of the world’s poorest countries are at risk of or already in debt distress. The IMF’s Kristalina Georgieva and Ceyla Pazarbasioglu, head of the fund’s strategy, policy, and review department, said last Thursday.
St. Vincent and the Grenadines, Haiti, Kiribati, Maldives, Marshall Islands, Micronesia, Papua New Guinea, Samoa, Tonga, and Tuvalu are among the island nations at risk according to the IMF.
With the Group of 20’s debt-service suspension initiative set to expire at the end of the year and interest rates on the rise, “low-income countries will increasingly struggle to service their debts,” IMF officials said.
“Some countries may face economic collapse unless G-20 creditors agree to accelerate debt restructurings and suspend debt service during the restructuring negotiations.”
Covid-19 has dealt a severe blow to the world’s poorest countries, triggering a recession that the World Bank estimates will push more than 100 million people into extreme poverty. According to the report, the difficulties are exacerbated by the discovery of the omicron variant, which is causing a new wave of infections.
Georgieva and Pazarbasioglu urged the G-20 to “step up” its so-called common framework — a plan to restructure loans — in order to assist poorer nations. Since its inception in November 2020, the strategy has been beset by delays and a lack of interest from debtor countries. Only three of the 73 eligible countries have applied for the programme — Chad, Ethiopia, and Zambia.
When the debt-service relief programme expires, “participating countries will be required to resume debt service payments,” IMF officials stated. “Immediate action is required to bolster confidence in the framework and layout a path forward for assisting other countries grappling with growing debt vulnerabilities.”
According to the IMF’s July 2021 country report on St Vincent and the Grenadines, the island’s economy contracted by 3.8 percent in 2020 as tourism activity fell by 70%. Economists predicted that economic growth in 2021 would be flat before the eruption as the global pandemic continued and tourism remained depressed. Additionally, the IMF forecasts that the economy will contract by 6.1 percent in 2021, with agriculture and related sectors being particularly hard hit by the La Soufriere eruption.
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