World Bank launches trust fund to assist Caribbean, other poor economies
WASHINGTON, April 6, CMC - The World Bank says the successful multi-donor trust fund has launched a new phase with commitments from donors for close to US$20 million to help the Caribbean and other poor countries manage debt.
The World Bank said the Debt Management Facility II (DMF II) programme builds on previous successes in debt-management advisory work and marks the beginning of a new partnership between the World Bank and the International Monetary Fund (IMF).
The partnership will be dedicated to strengthening the capacity of the Caribbean and other developing countries to manage their debt in a manner that is sustainable and encourages economic development, the World Bank said.
It said the facility expects to raise US$40 million, adding that the “new pot of money” will extend the work of the first DMF, a US$22 million trust fund that the World Bank launched in November 2008.
The initiative was born out of a recognition that low-income countries graduating from debt-relief programs, such as the Heavily Indebted Poor Countries (HIPC), might continue to struggle.
“There was a worry that they might fall into a vicious cycle of debt and assistance, an ounce of prevention is worth a pound of cure,” said Jonathan Rothschild, senior advisor to World Bank executive directors, who was a senior economist with the Canadian International Development Agency (CIDA), a donor to the first DMF.
Noting that the sovereign debt world can be complex, the World Bank said it realized that developing countries could improve their chances of staying on track with training on how to assess risks, better negotiate loan terms, and recognize the risks of borrowing from non-traditional creditors.
In five years, the World Bank said the DMF has reached out to more than 70 countries, and provided training to more than 600 client-country officials.
The DMF is currently funded by seven countries, the European Union and the African Development Bank.
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