IMF chief sees ‘high degree of uncertainty’ on the global stage

WASHINGTON (Reuters) – The head of the International Monetary Fund said on Monday that the global creditor needed more resources to help highly indebted countries, citing a highly uncertain global economic outlook and growing divergence between rich and poor countries.

IMF managing director Kristalina Georgieva, who has long advocated a new allocation of the IMF’s own currency, Special Drawing Rights (SDRs), said that doing so now would give more funds to use in both the economic and health crisis, and would accelerate the shift to a digital and green economy.

Under outgoing President Donald Trump, the United States, the IMF’s largest shareholder, blocked this new DES allocation, a move similar to a central bank printing money, as it would provide more resources to the wealthiest countries, since the allocation it would be proportional to their shareholding.

Swedish Finance Minister Magdalena Andersson, the new chairman of the IMF’s steering committee speaking at an online press conference with Georgieva, said it was clear that the liquidity need remains great and that she would consult with member countries on options to expand the liquidity.

Andersson, the first European to head the International Monetary and Financial Committee in more than 12 years and the first woman, began her three-year term here on Monday.

Georgieva said the IMF has rapidly increased concessional financing for emerging markets and developing economies, including through donations from member countries of about $ 20 billion in existing SDRs. This would continue to play an important role, but more action would be needed, she said.

“It will continue to be just as important, even more important, to be able to expand our capacity to support the countries that are left behind,” said Georgieva.

She said that a new SDR allocation was never removed from the table by IMF members, she said, adding that some members continued to discuss it as a possible change. A possible sale of gold from the IMF’s reserves would have “some opportunity costs” for the IMF, but it would be up to members, she said.

She said she hoped the Group of the 20 largest economies would extend the current moratorium on paying official debt service for the poorest countries, now due to end in June, but much will depend on the pace of vaccinations in the coming months.