Washington — On Wednesday, IMF Chief Crystalina Georgieva will allow rich IMF members to donate to a wider range of newly created emergency reserves in need of 20 for new trust. Won the approval of a group of major economies.
G20 Financial authorities endorse the new resilience and sustainability trust (RST) in the communiqué and have called on the International Monetary Fund and the World Bank to “work closely” to develop and implement financing under the new trust. rice field.
Treasury Secretary Janet Yellen also supported efforts to channel reserves known as Special Drawing Rights (SDRs) and “quick establishment” of new trusts, after Yellen met with G7 treasury officials. Said in a statement.
Through RST, IMF members will lend or donate a portion of the IMF’s $ 650 billion new SDR to provide long-term loans to small island developing states, vulnerable middle-income countries, and low-income countries already suffering from poverty. You will be able to do it. Trust in reduction and growth.
The creation of the trust aims to address concerns about many low- and middle-income countries that have been hit hard by the COVID-19 pandemic, reducing resources for preparation and allowing extreme weather conditions to be addressed. increase.
Georgieva first unveiled work on the trust in June, stating that the funds could be used to address the risks associated with climate change and pandemics, an application not covered by the current trust.
Georgieva told reporters Wednesday that the IMF Board was encouraged to consider the RST during the Friday meeting, and some wealthier members were already interested in contributing.
The IMF Staff Paper, viewed by Reuters, envisions income-based eligibility in all 69 PRGT countries, 15 small developing countries, and 55 middle-income countries, with 300 new trusts in 10 years. We forecast demand of between $ 100 million and $ 50 billion.
It proposed requiring RST applicants to have an existing IMF program with superior credit tranche conditions and to agree to reforms to enhance external and domestic stability.
Kevin Gallagher, director of the Center for Global Development Policy at Boston University, called the rapid approval of the new trust by the G20 a “breakthrough” and the urgency of the challenges facing countries around the world. I emphasized.
But he is wrong to ask applicants for an existing IMF program, as countries such as the Dominican Republic, which were at risk of extreme climate-related events such as hurricanes, will not be able to receive assistance. Said.
Hit the target
The IMF chief said he hopes developed countries will reach their goal of shifting a new SDR allocation of about $ 100 billion to those in need.
She also said the fund is taking steps to increase transparency regarding the use of SDRs.
Asked by several critics about the reservation that the RST trust overlaps with the World Bank’s mission, Georgieva said the fund is working closely with multilateral development banks in developing new trusts. rice field.
She said the IMF’s first presentation on RST was to the World Bank’s board of directors, and a large World Bank team participated in the staff’s presentation to the IMF’s board of directors.
Some members remain cautious. German Treasury Minister Schortz called for a “clear depiction” of the task between the fund and institutions such as the World Bank in a statement prepared for a meeting of the International Monetary and Financial Commission on Thursday, with new confidence. “Must be carefully designed,” he said. This is to avoid unintended consequences and shortcomings. “
He also said the IMF should act to avoid risks to the “shopping of facilities” and the ability of members to repay regular IMF programs, and climate change and pandemic preparedness is predominantly multilateral. He said it was within the scope of the development bank.
Martin Mullisen, head of the IMF’s strategic division from 2017 to 2020, quotes legitimate concerns about the “fundamental turnaround” of the fund’s agenda and increased overlap with the World Bank in the following article: Did. New Atlanticist..
He said the fund’s legal obligations are limited to providing short-term balance of payments assistance to help countries maintain financial stability, with expertise in advising countries on detailed climate policies. He said it was in short supply.