A recent International Monetary Fund initiative should ease the economic emergency in West African states most affected by the Ebola epidemic, but it will also serve as a template for responding to similar crises in the future, said Eric LeCompte, executive director of the Washington-based Jubilee USA Network.
The I.M.F. has organized a package of $330 million in grants and financing to aid countries that have struggled for months to contain the virus and now face the challenge of recovering from Ebola’s collateral economic damage. The plan includes $100 million in I.M.F. debt cancellation and $160 million in new I.M.F. loans for Liberia, Sierra Leone and Guinea. Another $70 million in debt relief will be offered by governments who hold debt in the three countries. The new plan expands a debt-relief facility previously used to cancel debt after Haiti’s 2010 earthquake. The Catastrophe Containment Relief Trust (C.C.R.T.) will become a permanent debt-relief facility for the world’s poorest countries when they experience economic shocks caused by epidemics or natural disasters.
“This is tremendously significant,” LeCompte told America. LeCompte, whose interfaith coalition seeks debt relief for the world’s poorest nations, was especially cheered that the new I.M.F. package included large grants that cleared debt outright. “Since day one we’ve campaigned for a real debt-relief facility, transparency and more grants as opposed to loans,” he said. The C.C.R.T., he explained, “isn’t a full debt-relief mechanism, but it is a debt-relief facility with clear rules that will benefit the world’s least developed nations when they experience shocks and crises.”
He explained that under the terms of the new I.M.F. plan money that would have gone into servicing national debt in the three nations hardest hit by the Ebola virus will instead be redirected to building social infrastructure and improving public health capacity.
The World Health Organization reported in late January that the number of new Ebola cases in West Africa fell below 100 for the first time in seven months. But U.N. Secretary General Ban Ki-Moon reminded world leaders on Jan. 30 that “Ebola will not be gone from any country, until it is gone from every country” and that “success in the affected countries will also mean repairing the damage caused by Ebola.”
“Children need to go to school, farmers need to return to their fields, markets and businesses must reopen,” he said.
LeCompte compared the Ebola disaster to Hurricane Sandy’s impact on the United States. The superstorm paralyzed America’s Northeast and cost billions in damage and interrupted economic activity. But the United States has the resources to recover quickly from such a catastrophe, he said. High poverty, heavily indebted nations like Liberia don’t.
Ebola not only claimed 8,000 lives in West Africa, he said; it brought the regional economy to its knees. Businesses, markets and schools closed down. Because of the crisis, the region’s international debt grew even more unsustainable.
And much of the past debt burdening the region, according to LeCompte, was incurred during one-party rule or during periods of conflict; loan transparency and accountability in most instances was completely lacking. According to LeCompte, the principal on much of the debt has already been paid off. He hopes the I.M.F. move will press other international lenders to reconsider the current debt obligations of states hit by Ebola.
The World Bank has so far not adjusted the $11 million in debt servicing it is scheduled to receive from West African states in 2015, an expectation described as “scandalous” by Tim Jones of the United Kingdom’s Jubilee Debt Campaign. In a statement released on Feb. 5, Jones pointed out that the I.M.F. has made almost $9 billion from its lending over the last three years. He added, “The I.M.F. can easily afford to cancel all the $620 million debt of Guinea, Liberia and Sierra Leone which will remain. It should do so. Moreover, other lenders should also cancel debts owed to them.