LONDON / WASHINGTON, June 24 (Reuters) – A new IMF plan for funding for “conservatism and sustainability” that will boost its support in dozens of other vulnerable countries gained key international support on Thursday ahead of a crucial meeting. The head of the IMF, Kristalina Georgieva, and this month proposed new confidence in rich countries to provide some new IMF reserve channels for the poor and middle-income counterparts affected by COVD or climate change.
“This is something we must support,” said Lars Jensen, a senior economist at the United Nations Development Program (UNDP) and author of a new report on how the IMF’s new funding should be handled. The UNDP estimates that the IMF’s Poverty Reduction and Growth Trust (PRGT), which is expected to play a key role in the voluntary revision of the new Special Drawing Rights (SDR) funds, is one of only 55 of the world’s two most indebted developing economies.
The rich countries of the Group of Seven (G7) alone will receive $283 billion of the $650 billion SDR allocation overall. All “high-income” countries will receive $438 billion, while $75 of the poorest countries will receive $62 billion among them. The COVID crisis is expected to release 47 of the 72 weakest countries, including already considered sustainable levels of debt. The COVID crisis is expected to release 47 of the 72 weakest countries, including already considered sustainable levels of debt. In addition, nine of the ten most vulnerable countries to climate change are high-risk developing economies.
Jensen said it would be normal to target the climate because of its global impact as a potential development goal of the organization in an SDR-weak country, Jensen said, adding that the fund could be increased even if it benefited from the adoption. G7 leaders have already indicated their support for the redistribution of $100 billion in new SDR funds. Georgieva said China has expressed interest in participating and other large emerging economies have also expected it.
The IMF’s executive board will meet on Friday to discuss the next steps, and finance officials from a group of 20 major economies will meet in Venice in July to discuss SDR rehabilitation. Scott Morris of the Center for Global Development says a recent budget request from the U.S. Treasury to allocate money to Congress for a proposed new IMF trust has undermined Washington’s support.