More synchronized action needed to tackle COVID economic crisis, IMF’s Georgieva says

In this news, we discuss the More synchronized action needed to tackle COVID economic crisis, IMF’s Georgieva says.

WASHINGTON / LONDON (Reuters) – The international community must do more to combat the economic fallout from the COVID-19 crisis, the head of the International Monetary Fund said on Monday, publicly calling on the World Bank to speed up lending to those most affected. African countries.

Some of the key events of the virtual and extended annual meetings of the IMF and the World Bank are taking place this week, with the most pressing question of how to support struggling countries.

“We will continue to push for more,” IMF Managing Director Kristalina Georgieva told an FT Africa online summit.

“I would also ask for more grants for African countries. The World Bank has the capacity to provide grants. Perhaps you can do even more… and bilateral donors can do more in this regard, ”Georgieva said in an unusual public display of discord between the two main international financial institutions.

No immediate comment was available from the Bank.

Georgieva said last week that the IMF had provided $ 26 billion in accelerated support to African states since the onset of the crisis, but a shortage of private lending meant the region faced a $ 345 billion funding gap. until 2023.

The pandemic, a collapse in commodity prices and a plague of locusts have hit Africa particularly hard, putting an additional 43 million people at risk of extreme poverty, according to World Bank estimates. African states have reported more than one million cases of coronavirus and some 23,000 deaths.

G20 governments are set to extend their Debt Service Suspension Initiative (DSSI) by six months, which has so far frozen around $ 5 billion in debt repayments from the poorest countries, but major development banks and private creditors are also in a hurry to provide relief.

MAINTAIN THE GOLD RESERVES

Georgieva said the Fund was also pushing richer member countries to lend more of their existing Special Drawing Rights (SDRs), the IMF’s currency, to countries most in need of support, and that it was “very determined ”to find a way forward for countries like Zambia now. need to restructure their debts.

The United States has blocked Georgieva’s quick call for issuing more SDRs, arguing that it would mainly benefit the richer countries, not the developing countries that need them most.

Pledges to the Poverty Reduction and Growth Trust Fund, which supports low-income countries, have totaled $ 21 billion to date, including $ 14 billion in existing SDRs, but additional resources are needed to urgently, an IMF spokeswoman said.

The IMF chief has dodged calls from civil society groups asking the IMF to sell off some of its vast gold reserves, saying the Fund sees them as an important “financial buffer”.

Profits from the sale of less than 7% of IMF gold could finance the cancellation of all debt payments from poorer countries to the IMF and the World Bank over the next 15 months, the campaign said. British Jubilee Debt Campaign in a new report released on Monday.

The IMF said its gold reserve of about 90.5 million ounces (2,814.1 metric tons) was worth about $ 137.8 billion at the end of December, up from its historic cost of 4.4 billion. of dollars.

Georgieva said countries in serious difficulty should restructure their debts as soon as possible.

“This is the message for all countries in debt distress … If the debt is not sustainable, please move on to restructuring, the sooner the better,” she said.

Georgieva said loan transparency was essential for all parties, and welcomed what she called China’s “encouraging” statements to move towards a more consolidated view of the debts held by the Chinese government and other institutions.

“I believe that the time has come in this crisis, to make… transparency essential and mandatory wherever possible everywhere,” she said.

Reporting by Marc Jones in London and Andrea Shalal and David Lawder in Washington; Editing by Tom Arnold, Ed Osmond and Andrea Ricci

Original © Thomson Reuters

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