The IMF has warned that St. Vincent and the Grenadines and other low-income countries could face economic collapse due to rising debt distress. The expiration of the G-20’s debt-service suspension initiative, combined with the impacts of COVID-19 and rising interest rates, exacerbates the situation. The IMF calls for immediate action to restructure loans and support these vulnerable nations amidst increasing economic challenges.
The International Monetary Fund (IMF) has issued a warning regarding the potential economic collapse of St. Vincent and the Grenadines, along with several other low-income nations. Approximately 60% of the world’s poorest countries are either at risk of, or currently experiencing, debt distress. Kristalina Georgieva, managing director of the IMF, alongside Ceyla Pazarbasioglu, highlighted these concerns due to escalating debt levels and insufficient restructuring efforts from international creditors.
Among the vulnerable nations identified by the IMF, St. Vincent and the Grenadines, along with Haiti, Kiribati, the Maldives, and several Pacific island nations, faces increasing economic challenges. With the G-20’s debt-service suspension initiative approaching its expiration, IMF officials warned that low-income countries would increasingly find it difficult to manage their debt obligations amidst rising interest rates.
The COVID-19 pandemic has severely impacted these nations, potentially pushing over 100 million people into extreme poverty. The emergence of the omicron variant has further complicated recovery efforts. The IMF urged the G-20 to enhance its common framework designed for loan restructuring to support poorer nations, noting that only three of the initially eligible countries have actively sought assistance.
The expiration of the debt-service relief program represents a critical point for participating nations, which will soon need to resume their debt obligations. Immediate efforts are vital to restore confidence in the framework and provide a roadmap for addressing the growing debt vulnerabilities faced by these countries.
According to the IMF’s report from July 2021, St. Vincent and the Grenadines has already seen its economy contract by 3.8% in 2020, primarily due to a 70% decline in tourism. The outlook for 2021 remains bleak, further exacerbated by the recent volcanic eruption at La Soufrière and the ongoing effects of the global pandemic on tourism and agriculture, with predictions indicating a contraction of up to 6.1%.
The IMF’s warning highlights the urgent need for international support for St. Vincent and the Grenadines and other low-income countries facing severe debt challenges. With the expiration of critical debt relief initiatives and the looming threat of renewed economic decline, decisive actions are required from the G-20 to facilitate effective loan restructuring and assist these vulnerable economies in their recovery efforts. Without immediate intervention, the risk of economic collapse increases significantly for these nations.
Original Source: wicnews.com
