World News

Japan to pledge contribution to IMF trust for low-income countries hit by pandemic: finance ministry source

By Tetsushi Kajimoto

TOKYO (Reuters) – Japan will next week pledge to contribute to an International Monetary Fund (IMF) trust offering debt relief to low-income countries hit hard by the coronavirus, a finance ministry official told Reuters on Wednesday.

Finance Minister Taro Aso will deliver the pledge, along with other contributions, at one of the meetings of the IMF and finance leaders of the Group of 20 major economies next week, said the source, who had direct knowledge of the matter but spoke on condition of anonymity.

The plan, including the amount to pledged, was still being finalised, said the official. In 2016 Japan pledged $20 million to the trust.

The IMF and G20 finance leaders’ meetings will be held via tele-conference due to the coronavirus pandemic.

Japan’s contributions will be funded by part of its 108 trillion yen ($990 billion) stimulus package unveiled on Tuesday to cushion the blow from the coronavirus pandemic.

The IMF’s Catastrophe Containment and Relief Trust (CCRT) provides eligible countries with grants for relief on IMF debt service. This facility was particularly effective during the 2014 Ebola outbreak, the global lender said.

With the help of donors, the IMF aims to boost funds available under CCRT from about $200 million to $1 billion.

It has recently taken steps to enhance the trust to provide debt relief to the poorest and most vulnerable member countries.

The coronavirus pandemic has infected over 1.4 million people globally, killed 82,000, and wreaked havoc on the global economy as governments worldwide impose sweeping lockdowns to rein in its spread.

Japan declared a one-month state of emergency in Tokyo and six other prefectures on Tuesday, and rolled out a nearly $1 trillion stimulus package to contain the damage from the virus.

Top IMF economists said on Monday the pandemic caused by the new coronavirus had pushed the world into a recession that would be worse than the 2008 global financial crisis, and called for a global, coordinated health and economic policy response.

(Reporting by Tetsushi Kajimoto; Additional reporting by Andrea Shalal in WASHINGTON; Editing by Michael Perry)