The International Monetary Fund said on Thursday that five wealthy countries pledged to provide $11.7 billion to an IMF loan and grant facility for poor countries, as the Fund’s steering committee vowed to review the adequacy of resources needed to fight the coronavirus pandemic.
IMF Managing Director Kristalina Georgieva said the firm commitments to boost the capacity of the Poverty Reduction and Growth Trust came from Japan, the United Kingdom, France, Canada and Australia, representing nearly 70% of the $17 billion increase she asked for on Wednesday.
The pledges were made during a Thursday morning meeting of the International Monetary and Financial Committee, the global crisis lender’s 24-member steering committee, held by videoconference.
Georgieva also said that Germany had pledged funds to another emergency grant facility to provide direct funds for the poorest countries, boosting the Catastrophe Containment and Relief Trust’s resources to $600 million.
In a statement, the IMFC reaffirmed its commitment to a strong, quota-based and adequately resourced Fund, and said the IMF should draw on relevant experience from previous crises as it explores options to expand resources.
“We remain committed to revisiting the adequacy of quotas and continuing the process of IMF governance reform under the 16th General Review of Quotas, including a new quota formula as a guide, by December 15, 2023,” the committee said.
The IMFC chairman, South African Reserve Bank Governor Lesetja Kganyago, told a news conference that the group showed “unprecedented global solidarity,” with rich countries offering resources to the IMF “so that the IMF has got the firepower to deploy to countries that are vulnerable that do not have resources.”
Georgieva said there was no consensus for a new Special Drawing Rights allocation, a move that would boost liquidity for all of the Fund’s 189 members. U.S. Treasury Secretary Steven Mnuchin on Thursday said the United States opposes such a move, confirming a Reuters report on Wednesday.
Georgieva said IMF members would explore how to deploy existing SDRs – the Fund’s monetary unit of exchange – to boost lending to developing countries on a larger scale.
There is broad consensus for this, including support from Mnuchin, who oversees the controlling U.S. shareholding in the Fund.
But the IMFC made a reference to new SDR issuance in its statement, saying: “We also call on the IMF to explore additional tools that could serve its members’ needs as the crisis evolves, drawing on relevant experiences from previous crises.
In 2009, the IMF created a $250 billion allocation of new SDRs – a move akin to a central bank “printing” new money, which provided a liquidity boost to all IMF members.
