Japan has recently announced a package of measures to respond to the economic challenges of coronavirus. While it has the clear intention to support the Japanese economy, Japan will also underpin the stability of the global economy through contributions to the International Monetary Fund’s resources for the provision of debt relief and concessional financing to low-income countries. In essence Japan will help the IMP with Coronavirus relief.
“I welcome the sizable economic and fiscal measures — totaling about one fifth of GDP — announced in the Japanese government’s April statement of Emergency Economic Measures for New Coronavirus Infections to address the economic impact of the coronavirus epidemic. These actions will help to alleviate the health challenges and support households and businesses to bridge through the economic challenges facing Japan,” said IMF Managing Director, Kristalina Georgieva.
Japan is the largest contributor to IMF financial resources, and largest contributor to the Fund’s concessional lending facilities. Japan is the largest PRGT lender and grant contributor among all IMF member countries. To date, it has provided close to SDR 9 billion (representing 23 percent of all PRGT loans) and over SDR 0.9 billion in subsidy grant resources (representing close to 15 percent of donors’ total contributions).
In April, Japan provided an additional US$100 million contribution to the IMF’s Catastrophe Containment and Relief Trust as immediately available resources to support the Fund’s capacity to provide grant-based debt service relief for the poorest and most vulnerable countries to combat COVID-19. In order to provide emergency financing for broader emerging markets and developing countries to meet their prospective imminent needs, on April 16, Japan announced that it is aiming at doubling its contribution to the Poverty Reduction and Growth Trust from the current SDR 3.6 billion. Japan will make available the first SDR 1.8 billion immediately. Japan calls on other member countries to follow quickly, and Japan will match an additional SDR 1.8 billion with their contributions.
The Managing Director praised Japan’s global leadership and support for the CCRT and PRGT. “These contributions represent a most welcome response to the International Monetary and Finance Committee’s call on the membership to provide the necessary support to mitigate the impact of the coronavirus crisis, especially for the poorest and most vulnerable countries. I urge other member countries to contribute to both the CCRT and PRGT. By working together, we can overcome the global challenge facing us and help restore growth and prosperity.”
The CCRT allows the International Monetary Fund to support international debt relief efforts when poor countries are hit by natural disasters and to assist poor countries battling public health crises—such as epidemics like the coronavirus—with grants for debt service relief.
The PRGT allows the International Monetary Fund to provide concessional financial support to low-income countries, to help them achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. Low-income countries are particularly hard hit because they lack the resources and infrastructure to respond to the unprecedented health and economic challenges from this pandemic. It is therefore crucial that the membership work together to support our poorest and most vulnerable members in this difficult period.
Multilateral financial institutions such as the International Monetary Fund and the World Bank have committed resources to assist member countries, with a focus on low income developing countries where health systems are the weakest and people are most vulnerable. The Fund is continuing to work with donors to increase the resources available in both the PRGT and CCRT, to provide concessional financing and extend the duration of debt relief to our poorest and most vulnerable member countries.