The International Monetary Fund (IMF) on Monday approved $ 7.6 million debt service relief for Burundi amid COVID-19 economic pains.
A debt service is the cash that is required to cover the repayment of interest and principal on a debt for a particular period. The $ 7.6 million debt service relief is the amount of money Burundi would have paid for a period of three months.
The IMF executive board said the debt service relief was under the Catastrophe Containment and Relief Trust.
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Under the agreement, creditors would forgive the amount of $ 7.63 million over the next three months, and potentially up to US$ 24.97 million over the next 21 months. Then Burundi would start paying the rest of its IMF debt.
The IMF said the debt relief “will help free up resources for public sector health needs including other emergency spending and help mitigate the balance of payments shock posed by the COVID-19 pandemic.”
In a statement, Mr. Mitsuhiro Furusawa, an IMF Deputy Managing Director and Acting Chair, said the COVID-19 pandemic is having an adverse economic impact on Burundi, creating exceptional fiscal and balance of payments needs.
“Looking ahead, it will be important to resume Article IV consultations with the Fund. Further improvement of data provision and coverage will be key for policy development and engaging with multilateral agencies and donors,’’ Furusawa said.