The additional money that developed countries will distribute to developing countries battling the financial impact of the pandemic has been less than expected, after G20Large Economies Group, reported a total commitment of $60 billion.
The amount to be distributed through the voluntary transfer of Special Drawing Rights (SDR), falls short of the $100 billion that was identified as the “global ambition” of the G20 last year. Moreover, it is less than a quarter of the $290 billion that was awarded to members of the Group of Seven in advanced economies last August in allocating $650 billion in SDRs from International Monetary Fund (International Monetary Fund).
The commitments were announced after a meeting of finance ministers and central bank governors in the Arab Republic of Egypt G20 held in Jakarta It ended last week.
World leaders have repeatedly called for the special drawing rights granted to rich countries to be directed to the poorest countries most in need. But so far, according to internal documents from G20 What can he see? financial timesOnly 13 countries have pledged to lend $10 billion of their SDRs to low-income countries through Trust Fund for Growth and Poverty Reduction from the International Monetary Fund, and another $50 billion through the yet-to-be-established Resilience and Sustainability Trust Fund for vulnerable low- and middle-income countries.
“It’s a great start, but it’s nowhere near what the G20 can promise in SDRs,” said Simon Quijano-Evans of Gemcorp Capital Management, an asset manager that lends to governments and businesses in Africa. “The G-20 should stop thinking so much and do just that,” he added.
The Special Drawing Rights It is a form of reserve assets that is equivalent to newly issued money, which International Monetary Fund It can be customized in times of global financial stress. They are given in the form of grants rather than loans, and they do not carry any political restrictions associated with government loans. International Monetary Fund. It is intended for each of the Fund’s 190 member countries based on their participation in the global economy.
Of the $650 billion allocated in August, about $275 billion went to emerging and developing economies, of which only $21 billion went to low-income countries.
In his statement, the G20 It indicated that it would continue to work to reach its $100 billion target International Monetary Fund who created the Resilience and Sustainability Fund Before the Spring Meetings of the International Monetary Fund and world bank in April.
According to the internal document, the biggest commitments so far were those of United State, with $21 billion, and Chinawith $14 billion. Italy, France And the United kingdom They have pledged between $4 billion and $5.6 billion each.
Critics claim that guidance Special Drawing Rights As loans through credits International Monetary Fund It will reduce its impact because it will have to be repaid, albeit at zero or low interest rates, and may force governments to take steps to balance their budgets through taxation or spending cuts in a time of economic distress.
Many poor countries are struggling with a sharp rise in debt payments this year as pandemic support measures begin to be withdrawn. David MalpassPresident world bankHe warned last month that there was an increased risk of erratic defaults among poor nations, many of which carry debt to fund their emergency response.