The head of the IMF on Monday said that the global lender needed more resources to help heavily indebted countries, citing a highly uncertain global economic outlook and a growing divergence between rich and poor countries.
IMF managing director Kristalina Georgieva, who has long advocated a new allocation of the IMF’s own currency, Special Drawing Rights (SDRs), said that doing so now would give more funds to address the health and economic crises, and accelerate moves to a digital and “green” economy.
Under US President Donald Trump, the US, the IMF’s largest shareholder, blocked such an SDR allocation, a move akin to a central bank printing money, as it would provide more resources to richer countries because the allocation would be proportionate to their shareholding.
Photo: Reuters
Swedish Minister of Finance Magdalena Andersson, the new chair of the International Monetary and Financial Committee speaking at an online news conference with Georgieva, said that it was clear the need for liquidity remained great, and she would consult with member countries on options for expanding liquidity.
Andersson, the first European to head the IMF’s steering committee in more than 12 years, and the first woman, started her three-year term on Monday.
Georgieva said that the IMF had rapidly increased concessional financing to emerging market and developing economies, including through donations by member countries of about US$20 billion in existing SDRs.
That would continue to play an important role, but further steps are needed, she said.
“It will continue to be so important, even more important, for us to be able to expand our capacity to support countries that have fallen behind,” Georgieva said.
A new SDR allocation had never been taken off the table by IMF members, she said, adding that some members continued to discuss it as a possible move.
A possible sale of gold from the IMF’s reserves would have “some opportunity costs” for the IMF, but would be up to members, she said.
She said that she expected the G20 major economies to extend the moratorium in official debt service payments by the poorest countries, now slated to end in June, but much would depend on the pace of COVID-19 vaccinations in coming months.
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