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Article02 Mar 2021

Transforming Debt: Re-Focusing in the COVID-19 Era

This article looks at how multilateral development banks are helping borrowers, many of which have massive financing needs in the wake of the COVID-19 pandemic, to better insulate themselves from global events and systemic shocks by modifying the currency-denomination of their existing loans.

The IMF's World Economic Outlook Update, published in June 2020, predicts that the global economy will shrink by 4.9% in 2020 - 1.9 percentage points more than estimated in its April 2020 forecast. Emerging market and developing economies will contract by 3.0% this year - their first contractions as a group for at least 60 years. Considerable uncertainty remains about the course of the pandemic and the pace of any economic recovery.


The Secretary-General of the United Nations, Antonio Guterres, believes the “unparalleled economic shock” of COVID-19 could put development gains at risk and notes that rebuilding to pre-crisis levels of employment and output may take years. The international development community anticipates that the severe and diverse impacts of the pandemic will exacerbate  the challenge of achieving the targets set out in the UN Sustainable Development Goals.

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