The IMF on Thursday urged advanced economies in the G20 to extend and improve its debt relief initiative, warning that many countries face a dire crisis without the help.

“We may see economic collapse in some countries unless G20 creditors agree to accelerate debt restructurings and suspend debt service while the restructurings are being negotiated,” IMF chief Kristalina Georgieva said in a blog, adding that it is critical private creditors also offer relief.

The G20 Debt Service Suspension Initiative (DSSI) expires at the end of the year, and without a renewal, countries could faced financial pressure and spending cuts just as new COVID-19 variants are spreading and interest rates are expected to rise, she said.

“Debt challenges are pressing and the need for action is urgent. The recent Omicron variant is a stark reminder that the pandemic will be with us for a while,” Georgieva said in the blog co-authored by Ceyla Pazarbasioglu, director of the fund’s Strategy, Policy, and Review Department.

Given the problems with the debt relief programme and the common framework for dealing with private creditors, only three countries so far have applied for relief – Chad, Ethiopia and Zambia – and they have faced “significant delays”.

The framework has “yet to deliver on its promise. This requires prompt action,” she said.

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