The IMF in June denied Nepal support under its Catastrophe Containment and Relief Trust (CCRT), designed for natural emergencies, following the earthquake in April which killed over 8,000 people, displaced 450,000 and left over half a million homes destroyed. Following reform to the CCRT in February, $100 million in debt was cancelled for western African countries hit by the Ebola outbreak (see Observer Spring 2015). Further back in 2010, the IMF cancelled Haiti’s $268 million debt after a massive earthquake under the CCRT’s precursor; the Post-Catastrophe Debt Relief (PCDR, see Update 72).
IMF spokesperson Gerry Rice said in June that “Nepal would not qualify for support” under the CCRT due to strict IMF criteria. According to Rice, for Nepal “the estimate of the GDP damage does not meet these criteria.” Instead, the Fund approved a July request from Nepal for a loan of $50 million via the IMF’s Rapid Credit Facility, the “primary tool for providing rapid financing with limited conditionality to low income countries facing urgent, balance of payment needs due to an exogenous and external shock including natural disasters.”
Criteria for debt relief under the CCRT criteria include that the disaster impacted at least a third of the population, destroyed 25 per cent of the nation’s productive capacity, or caused destruction equivalent to the size of the country’s entire economy. Eric LeCompte of NGO Jubilee USA Network said: “Given the devastation in Nepal it is hard to believe that criteria was not met.” Currently, Nepal owes the IMF, the World Bank, the Asian Development Fund and other foreign creditors $3.8 billion dollars in debt. In 2013 Nepal paid $217 million in debt payments, equal to 1.13 per cent of its GDP.