WASHINGTON/LONDON (Reuters) – The international community must do more to tackle the economic fallout of the COVID-19 crisis, the head of the International Monetary Fund said on Monday, publicly calling on the World Bank to accelerate its lending to hard-hit African countries.

FILE PHOTO: IMF Managing Director Kristalina Georgieva speaks during a conference hosted by the Vatican on economic solidarity, at the Vatican, February 5, 2020. REUTERS/Remo Casilli

Some of the key events of the virtual and elongated annual meetings of the IMF and World Bank take place this week, with the most pressing issue how to support struggling countries.

“We are going to continue to push to do even more,” IMF Managing Director Kristalina Georgieva said during an online FT Africa summit.

“I would beg for also more grants for African countries. The World Bank has grant-giving capacity. Perhaps you can do even more… and bilateral donors can do more in that regard,” Georgieva said in an unusual public display of discord between the two major international financial institutions.

No immediate comment was available from the Bank.

Georgieva last week said the IMF had provided $26 billion in fast-track support to African states since the start of the crisis, but a dearth of private lending meant the region faced a financing gap of $345 billion through 2023.

The pandemic, a collapse in commodity prices and a plague of locusts have hit Africa particularly hard, putting 43 million more people at risk of extreme poverty, according to World Bank estimates. African states have reported more than 1 million coronavirus cases and some 23,000 deaths.

G20 governments are expected to extend for six months their Debt Service Suspension Initiative (DSSI) which has so far frozen around $5 billion of poorer countries’ debt payments, but pressure is

AM Best believes proposed public-private partnerships to address the disastrous effects on businesses related to COVID-19 are warranted, given the systemic risk posed by the pandemic.

In its new Best’s Commentary, “Retroactive Legislation, Social Inflation: Credit Negatives for Insurers,” AM Best states that it expects significant reserve uncertainty arising for the current accident year given the challenge for insurers to estimate ultimate losses resulting from the COVID-19 pandemic and the related shutdowns. Social inflation, combined with lawsuits addressing liability policies, will drive defense containment costs significantly higher. Court decisions will influence actual claims payouts, creating challenges in determining prudent reserve estimates and payout patterns. In addition, a number of legislative and policy measures are being contemplated that would nullify business interruption coverage exclusions in commercial property policies and force insurers to compensate policyholders for risks that were excluded during underwriting. Insurers with smaller capital bases in particular would be more vulnerable to these measures. AM Best previously has discussed the potential threat to property/casualty insurers’ solvency should legislated policy changes force them to pay retroactive coverage (see related Best’s Commentary).

AM Best believes any public-private partnership adopted to fill this protection gap should take into account the capital supporting all risks insurers bear, which is critical due to the uncertainty inherent in taking on those risks. As insurers consider the level of capital they should hold, they factor in the demands that each risk poses, as well as assumptions about the level of diversification among these risks. In addition, rating agencies and regulators require a specified level of capital commensurate with the level of risk the insurers have on their books.

“Pandemic risk does not afford insurance companies any geographic diversification due to its global nature,” said Stefan Holzberger, AM Best chief rating officer. “Diversification by line of

FILE PHOTO: World Bank Group President David Malpass attends a news conference after a meeting at the Chancellery in Berlin, Germany October 1, 2019. REUTERS/Hannibal Hanschke

BERLIN (Reuters) – The COVID-19 pandemic could trigger a debt crisis in some countries, so investors must be ready for granting some form of relief that could also include debt cancellation, World Bank President David Malpass was quoted as saying on Sunday.

“It is evident that some countries are unable to repay the debt they have taken on. We must therefore also reduce the debt level. This can be called debt relief or cancellation,” Malpass told Handelsblatt business daily in an interview.

“It is important that the amount of debt is reduced by restructuring,” Malpass added.

He pointed to similar steps in previous financial crises such as in Latin America and the so-called HIPC initiative for highly indebted countries in the 1990s.

Rich countries last month backed an extension of the G20’s Debt Service Suspension Initiative (DSSI), approved in April to help developing nations survive the coronavirus pandemic, which has seen 43 of a potential 73 eligible countries defer $5 billion in “official sector” debt payments.

Amid warnings the pandemic could push 100 million people into extreme poverty, Malpass renewed his call for private banks and investment funds to get involved too.

“These investors are not doing enough and I am disappointed with them. Also, some of the major Chinese lenders did not get enough involved. The effect of the aid measures is therefore less than it could be,” the World Bank head said.

Malpass warned that the pandemic could trigger another debt crisis as some developing countries had already entered a downward spiral of weaker growth and financial trouble.

“The enormous budget deficits and debt payments are overwhelming these economies. In addition, the

BERLIN (Reuters) – The COVID-19 pandemic could trigger a debt crisis in some countries, so investors must be ready for granting some form of relief that could also include debt cancellation, World Bank President David Malpass was quoted as saying on Sunday.

“It is evident that some countries are unable to repay the debt they have taken on. We must therefore also reduce the debt level. This can be called debt relief or cancellation,” Malpass told Handelsblatt business daily in an interview.

“It is important that the amount of debt is reduced by restructuring,” Malpass added.

He pointed to similar steps in previous financial crises such as in Latin America and the so-called HIPC initiative for highly indebted countries in the 1990s.

Rich countries last month backed an extension of the G20’s Debt Service Suspension Initiative (DSSI), approved in April to help developing nations survive the coronavirus pandemic, which has seen 43 of a potential 73 eligible countries defer $5 billion in “official sector” debt payments. [nL5N2GL6KB]

Amid warnings the pandemic could push 100 million people into extreme poverty, Malpass renewed his call for private banks and investment funds to get involved too.

“These investors are not doing enough and I am disappointed with them. Also, some of the major Chinese lenders did not get enough involved. The effect of the aid measures is therefore less than it could be,” the World Bank head said.

Malpass warned that the pandemic could trigger another debt crisis as some developing countries had already entered a downward spiral of weaker growth and financial trouble.

“The enormous budget deficits and debt payments are overwhelming these economies. In addition, the banks there are getting into difficulties due to bad loans,” Malpass added.

(Reporting by Michael Nienaber; Editing by Peter Cooney)

Copyright 2020 Thomson Reuters.