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Pope Francis calls for debt forgiveness as Sri Lanka and developing nations hit by Coronavirus

ECONOMYNEXT – Pope Francis on Sunday called for the reduction or forgiveness of the debt of poor nations as the Coronavirus pandemic devastates societies and economies around the world including Sri Lanka.

“May all nations be put in a position to meet the greatest needs of the moment through the reduction, if not the forgiveness, of the debt burdening the balance sheets of the poorest nations,” the pope said in a livestreamed Easter message.

The International Monetary Fund and the World Bank has also called for creditor nations to ease debt for up to 75 countries listed as eligible for concessional lending from the agencies.

Sri Lanka also qualifies.

Sri Lanka has also called for debt relief for developing nations.

Poorer countries as well as oil-exporting nations have been badly hit by the crisis.

As lockdowns bring economic activities to a standstill, Treasuries lose revenue. Expenses such as state worker salaries put pressure on finances though other costs may fall.

Countries that have soft-pegged regimes and try monetary stimulus would also see their external sector deteriorate, though those that maintain prudent policy would be able to borrow at low rates benefitting from rates cuts by reserve currency central banks, analysts say. (Colombo/April13/2020)

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