On March 25, 2020, the President of the World Bank and the Managing Director of the IMF issued a joint statement to call for debt service relief in 2020 for the poorest countries1. They called on bilateral official creditors to support a coordinated time-bound suspension of debt service payments for the poorest countries (Beneficiary countries) in response to the impact of the COVID-19 crisis (the Initiative).
The Export Credit Agencies, members of the Paris Club, take part in this Initiative and support debt service suspension of payments due by the Beneficiary countries during the period May 1 – December 31, 2020.
For Credendo – Export Credit Agency, the Initiative will affect two types of maturities:
- Installments due under already agreed Paris Club Agreements, so called previously rescheduled debt and
- Repayments of principal and interest due to our Export Credit Agency as a result of compensation payment(s) made before March 24th, 2020 on an officially supported export credit.
The Initiative will as such not affect new contracts that are currently being honoured under ongoing and recently finished projects, nor does it affect contracts for which no compensation payments are made before the aforementioned date of 24 March 2020.
Private creditors such as banks and bondholders are called upon to participate on a voluntary basis.
Terms for the debt service
The terms for the debt service suspension initiative for the poorest countries are the following:
- Scope of Beneficiary countries are all IDA eligible countries that are current on any debt service to the IMF and the World Bank.
- The duration of the suspension of payment lasts until the end of 2020 with possible extension, taking into account a report on the liquidity needs of eligible countries by the World Bank and IMF. The suspension period starts on May 1, 2020.
- Both principal repayments and interest payments will be suspended.
- A cut-off date protecting new financing is set on March 24, 2020.
- The repayment period will be 4 years in total 3 years: one-year grace period (2021) and first repayment in June 2022.
- The suspension of payments will be NPV-neutral.
For any further clarification or questions, please contact: Romanie Peters.