IMF approves disbursement of $43.4 million loan money to Djibouti to address COVID-19 economic crisis

The International Monetary Fund (IMF) on Tuesday approved the disbursement of $43.4 million loan money to Djibouti to address the COVID-19 pandemic.

The money was disbursed under the Rapid Credit Facility (RCF) and Debt Relief Under the Catastrophe Containment and Relief Trust (CCRT), the IMF said.

IMF said the money will generate additional resources of $2.3 million over the next five months, and potentially up to $8.2 million over the next 23 months.

“IMF support will provide additional resources for the essential health and other emergency spending, including social safety nets. It will also help catalyze additional donor support,” IMF said in a statement on Tuesday.

Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said the COVID-19 pandemic “is having a severe impact on Djibouti, creating urgent balance of payments and fiscal financing needs.”

“The IMF’s emergency financing under the RCF and debt service relief under the CCRT will provide much-needed liquidity to support the authorities’ response to the crisis and could catalyze further assistance from the international community, preferably in the form of grants,” Furusawa added.

He recommended that once the crisis abates, temporary measures should be unwound, with policies refocusing on promoting a strong and inclusive recovery and preserving medium-term debt sustainability.

“It will be critical to address and prevent the recurrence of external arrears, ramp up operations of key projects, and reduce public sector borrowing. Reducing tax expenditures is also important to create space for poverty-reducing spending. Efforts to strengthen banks’ balance sheets, enhance the business environment, improve the governance and efficiency of public enterprises, and reduce production factor costs will be essential to foster strong and inclusive growth,” he said.

Chief White House Correspondent for

Simon Ateba is Chief White House Correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the U.S. government, the United Nations, the International Monetary Fund, the World Bank and other financial and international institutions in Washington D.C. and New York City.

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