© Reuters File Photo: International Monetary Fund (IMF) Managing Director Kristalina Georgieva comments at an inaugural press conference during the annual fall meeting of the IMF and the World Bank’s 201 finance ministers and bank governors in October, United States.
Written by Andrea Shalal
WASHINGTON (Reuters) – IMF chief Cristalina Georgieva on Wednesday approved a group of 20 major economies for a new trust that would allow wealthy IMF members to donate part of their newly created emergency reserves to a wider range of needs.
G20 finance officials in their essay https://www.g20.org/wp-content/uploads/2021/10/G20-FMCBG-Communique%CC%81-Fourth-G20-FMCBG-Meeting-1-October-2011. The PDF, and called on the International Monetary Fund and the World Bank to “cooperate closely” to develop and implement financing under the new trust.
The RST will allow IMF members to channel a new portion of the IMF’s ৫ 650 billion special drawing rights so that they can provide long-term financing to small island states and weak middle-income countries, as well as reduce and increase trusts to already low-income countries.
The trust is designed to address the concerns of many low- and middle-income countries affected by the Kovid-1 pandemic epidemic, leaving them with less resources to prepare for and deal with extreme weather events.
Georgia first published work on the trust in June https://www.reuters.com/business/exclusive-imf-exploring-creation-new-trust-provide-sdrs-broader-group-countries-2021-06-13 Its funds can be used to deal with epidemic-related risks, which are not covered by the current trust.
Georgieva told reporters Wednesday that she was encouraged by the IMF’s executive board’s consideration of the RST at a meeting on Friday and said some wealthy members had already expressed interest in contributing.
An IMF staff paper seen by Reuters predicts demand from 30 30 billion to 50 50 billion for new trusts in 10 years, estimating income-based eligibility for 15 small developing states and 55 middle-income countries out of all 69 countries eligible for PRGT. By
It proposed that RST applicants must have an existing IMF program subject to higher credit trench conditions and agree to reforms to strengthen external and domestic stability.
Kevin Gallagher, director of the Center for Global Development Policy at Boston University, called the new trust’s speedy approval of the G20 a “groundbreaking achievement” that highlights the urgency of the challenges facing countries around the world.
But he said applicants would need to have an existing IMF program, as it would leave countries like the Dominican Republic, which were at risk of extreme climate-related events like hurricanes without access to assistance.
Referring to the target, the IMF chief said he hoped that countries with developed economies would reach the target of shifting about ১০ 100 billion in new SDR allocations.
He said the fund is taking steps to increase transparency about the use of any SDR.
Asked about the reservations published by some critics that the RST Trust would comply with the World Bank’s order, Georgieva said the fund is working closely with the Multilateral Development Bank to create new trusts.
He said that the first presentation of the IMF on RST was to the board of the World Bank and a large team from the World Bank took part in the presentation of staff to the IMF board.
Some members are wary. German Finance Minister Olaf Schulz, in a statement prepared for Thursday’s meeting of the International Monetary and Financial Committee, called for a “clear outline” of work between the fund and institutions such as the World Bank and said any new trust should be “carefully designed” to avoid unintended consequences and imperfections. ”
He added that the IMF should work to avoid “risk buying” and risk the ability of members to return to regular IMF programs, noting that climate change and epidemic preparedness remain the motivations of the multilateral development bank.
Martin Muelisen, who headed the IMF’s strategy department from 2020-2020, noted in a New Atlanticist article that the fund’s agenda was “a fundamental restructuring” and a legitimate concern about the growing overlap with the World Bank. https: //www.atlanticc Council.org/blogs/new-atlanticist/the-imf-needs-to-prepare-for-the-post-covid-world
He said the fund’s legal mandate was limited to providing short-term out-of-balance assistance to help countries maintain financial stability and lacked the ability to advise countries on detailed climate policy.