Countries, mostly middle and lower-income, have been burdened by surcharges on top of interest payments on their borrowings from the International Monetary Fund (IMF), widening global inequities, according to a report by US think tanks. 

WHY IT’S IMPORTANT

Indebted member countries paid about $6.4 billion in surcharges between 2020-2023, the report from Boston University’s Global Development Policy Center and Columbia University’s Initiative for Policy Dialogue released on Tuesday showed.
And the number of countries paying these surcharges has more than doubled in the last four years.
The IMF is expected to charge an estimated $9.8 billion in surcharges in the next five years, according to an earlier report by the Center for Economic and Policy Research.
Critics of the policy argue that surcharges do not hasten repayment and instead punish countries already struggling with liquidity constraints, increase the risk of debt distress and divert scarce resources that could be used to boost the struggling economies.
BY THE NUMBERS
Countries such as Ukraine, Egypt, Argentina, Barbados and Pakistan pay the most in surcharges, the report showed, accounting for 90 percent of the IMF’s surcharge revenues.
These surcharges, levied on top of the fund’s increasingly steeper basic rate, are IMF’s single largest source of revenue, accounting for 50 percent of total revenue in 2023.
KEY QUOTES
“IMF surcharges are inherently pro-cyclical as they increase debt service payments when a borrowing country is most need of emergency financing,” Global Development Policy Center’s director Kevin Gallagher said.
“Increasing surcharges and global shocks are compounding the economic pressure on vulnerable countries.”
CONTEXT
Data published by the Institute of International Finance earlier this year showed global debt levels hit a record of $313 trillion in 2023, while the debt-to-GDP ratio — a reading indicating a country’s ability to pay back debts — across emerging economies also scaled fresh peaks.
IMF shareholders agreed last week on the importance of addressing challenges faced by low-income countries, Managing Director Kristalina Georgieva said on Friday.

ISLAMABAD: Pakistan’s National Disaster Management Authority (NDMA) on Wednesday cautioned citizens in Khyber Pakhtunkhwa, Balochistan, Azad Kashmir and Gilgit-Baltistan areas against rising water levels, as it braces for heavy rains in various parts of the country from Apr. 25-30. 

A westerly wave from Apr. 25-30 is expected to bring “significant” rainfall and thunderstorms in Balochistan, KP, the northern Gilgit-Baltistan region, and Azad Kashmir, the NDMA said. 

The disaster management authority said these areas are expected to face heavy to moderate rains, windstorms, and hailstorms while it was expected to snow over high mountains.

“Residents near riverbanks and nullahs should be aware of rising water levels and evacuate if necessary,” the NDMA said. “Citizens are urged to exercise caution, avoid weak structures and waterways, and stay updated on weather conditions.”

It also urged farmers, livestock owners, tourists, and travelers to take protective measures for their safety and properties. 

The NDMA urged authorities to prepare for potential floods and landslides, especially in upper KP, Murree, Galyat, Azad Kashmir, and GB. 

“Authorities should ensure readiness to respond to emergencies, with machinery and staff pre-positioned in vulnerable areas,” it added. 

A spell of heavy rains from April 12-21 in Pakistan’s Punjab, Balochistan and KP killed over 90 people, destroying property and farmlands. Experts say the country is experiencing heavier rains than normal in April because of climate change effects.

In 2022, downpours swelled rivers and at one point flooded a third of Pakistan, killing 1,739 people. The floods also caused $30 billion in damages, from which Pakistan is still trying to rebuild.

Pakistan consistently ranks among the world’s worst-affected countries due to climate change.