Updated: March 1, 2021
Overall, the International Monetary Fund is currently making about $250 billion, a quarter of its $1 trillion lending capacity, available to member countries for COVID-19 relief, according to their website.
“As part of the COVID-19 related rapid arrangements, borrowing countries have committed to undertake governance measures to promote accountable and transparent use of these resources.”
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The emergency assistance helps address budget shortfalls with progressive taxation, and cut corruption and wasteful spending. However, there are not strict terms that force governments to follow the loan agreements.
At a glance, the IMF is providing assistance in three main areas: emergency financing, calls for bilateral debt relief, and capacity development.
Emergency financing programs like the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) have allowed the IMF to meet increasing demand during the crisis.
Calls for bilateral debt relief to suspend service payments from the poorest countries is an ongoing process. Many have agreed to suspend until the end of June 2021. By providing temporary relief of financial constraints, countries can use this money to address human and economic impact due to the COVID-19 pandemic.
Capacity development, arguably the most sustainable of the IMF’s lending programs, provides millions of dollars in increasing healthcare capacity, food distribution, social protection transfers, and access to water and sanitation facilities.
In Eswatini for example, budgets have been allocated towards refurbishing hospitals and completing new hospitals. This means that with increased infrastructure development, the hospitals will have better ability to distribute vaccines once supply is available. The government has also received a relief fund to prevent from laying off more workers and providing financial assistance for already laid off workers.
The IMF’s lending aims at giving countries space to implement adjustment policies that help economic growth, not necessarily provide aid to COVID-19 health programs directly. This monetary aid helps countries prevent and mitigate financial crises. While it is important to focus on health programs during a pandemic, it is also important to stabilize financial systems so that when the health crisis has ceased, there is not an economic collapse.