The IMF warns that St. Vincent and the Grenadines is at risk of economic collapse along with other low-income nations, citing debt distress exacerbated by COVID-19 and impending expiration of debt relief initiatives. They urge the G-20 for proactive measures in loan restructuring to avert severe economic impacts.
The International Monetary Fund (IMF) has raised alarms regarding the economic stability of St. Vincent and the Grenadines, among other low-income nations, predicting a potential economic collapse. Approximately 60% of the world’s poorest countries are either in debt distress or at risk of entering it. Smith’s Kristalina Georgieva and Ceyla Pazarbasioglu conveyed these concerns, emphasizing that the expiration of the G-20’s debt-service suspension initiative at year-end, coupled with climbing interest rates, will create further challenges for these nations in managing debt payments.
St. Vincent and the Grenadines, along with nations such as Haiti and the Maldives, have been identified by the IMF as particularly vulnerable. The IMF warns that without proactive measures from G-20 creditors to expedite debt restructuring and temporarily suspend debt obligations, some countries may face dire economic outcomes. The negative socioeconomic impacts of the COVID-19 pandemic have intensified these concerns, with the World Bank suggesting that over 100 million individuals may be pushed into extreme poverty.
Georgieva and Pazarbasioglu urged the G-20 to enhance its common framework intended for loan restructuring to provide better support for struggling nations. Since its launch in November 2020, this framework has faced bureaucratic delays and limited engagement from eligible countries; only three out of 73 countries (Chad, Ethiopia, and Zambia) have sought assistance thus far. Once the debt-service relief program concludes, participating nations will have to recommence debt payments, prompting calls for immediate actions to restore confidence in the lending framework.
According to the IMF’s mid-2021 report, the economy of St. Vincent and the Grenadines contracted by 3.8% in 2020, heavily influenced by a dramatic 70% drop in tourism. Despite forecasts projecting stagnant growth in 2021, the eruption of La Soufriere has further compounded economic difficulties, leading to an anticipated contraction of 6.1% for the year, with agriculture suffering significant setbacks.
In summary, the IMF has issued a critical warning regarding the economic prospects of St. Vincent and the Grenadines and several other low-income nations, raising the alarm over potential economic collapse due to debt distress and the impacts of the COVID-19 pandemic. Urgent action and restructuring support from G-20 creditor nations are essential to assist these nations in overcoming growing financial challenges, especially as existing relief programs are set to expire. The ongoing difficulties stemming from the pandemic and natural disasters further exacerbate the economic vulnerabilities faced by these countries.
Original Source: wicnews.com
