G20 to urge IMF reserve boost for vulnerable countries

FILE PHOTO: A participant stands near a logo of IMF at the International Monetary Fund – World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS/Johannes P. Christo

VENICE (Reuters) – G20 finance ministers are to urge the International Monetary Fund to quickly come up with ways for countries to steer IMF resources that they do not need to countries that do, the latest version of their statement from a meeting in Venice showed.

The IMF said on Friday that its executive board had backed a $650 billion allocation of IMF Special Drawing Rights, advancing the distribution of currency reserves to the IMF’s 190 member countries towards a targeted completion by the end of August.

“To significantly magnify the impact of the allocation, we call on the IMF to quickly present actionable options for countries to voluntarily channel a share of their allocated SDRs to help vulnerable countries,” said the G20 statement, which two sources said was expected to be released without changes at the ministers’ meeting in Venice.

“We call for contributions from all countries able to do so to reach an ambitious target in support of vulnerable countries,” it said.

Some countries, including France and the United States, have proposed that an additional $100 billion in SDRs that rich countries will get under the new allocation should be made available to poor countries.

As the pandemic strained developing countries’ finances, G20 countries agreed last year to suspend debt servicing payments from 45 countries. An estimated $4.6 billion were deferred in the first half of 2021.

With some countries needing even deeper debt relief, the G20 has also agreed a common framework for restructuring countries’ debt, under which Chad, Ethiopia and Zambia have already asked for help.

The G20 statement said the ministers welcomed recent progress on Chad and urged all bilateral government and private creditors to offer the countries the same restructuring terms as those to be agreed under the common framework.

The ministers also said they looked to forward to addressing Ethiopia’s case, which has made little progress so far, in a “timely” fashion. The IMF recently called for a creditor committee to be set up quickly to enable debt relief for Ethiopia.

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