The International Monetary Fund is looking to triple its concessional financing for the poorest countries to over $18 billion to help them respond to the novel coronavirus pandemic, Managing Director Kristalina Georgieva said on Wednesday.
“We have full support of the membership to go on the offensive to raise more capacity for concessional funding from the IMF. Our target is to triple what we do for those countries,” she told a news briefing held by videoconference.
Concessional loans generally offer terms that are favorable to those available on the market.
Earlier, Georgieva issued a statement to a G20 finance ministers and central bank governors meeting, saying the Fund was “urgently seeking $18 billion in new loan resources for the Poverty Reduction and Growth Trust, and would also likely need at least $1.8 billion in subsidy resources.”
Georgieva underscored the unprecedented nature of the crisis, noting that 102 of the IMF’s 189 member countries had expressed interest in or formally requested assistance from the Fund to battle the disease. She has urged donor countries to step up and help emerging markets and developing economies that will hit hardest by the crisis.
Late on Wednesday, she said the Fund’s Executive Board had approved creation of a short-term liquidity line, a revolving and renewable backstop for member countries with very strong policies and fundamentals.
The new instrument, first proposed but not finalized in 2015, allows certain countries revolving access of up to 145% of their quota to cover short-term balance-of-payments needs, which could prove helpful in the current crisis.
Georgieva told the briefing there was also an “emerging consensus” to deploy existing Special Drawing Rights to allow more lending to developing countries.
But her sentiment on the SDRs – the IMF’s unit of exchange – was at odds with a statement from G20 finance leaders that said the group had reached no consensus over the use of SDRs, either through a new allocation or through lending “excess” SDRs to poor countries.
A new allocation of SDRs to IMF members, akin to a central bank “printing” new money, could add hundreds of billions of dollars in new liquidity, but the United States has opposed the move, in part because it would provide ample resources with no conditions to countries like China and Iran, Reuters has reported.
One source familiar with the issue said Washington would accept the donation of existing SDRs to help other countries.
The G20 officials did 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.”
The IMF issued $250 billion in new SDRs to member countries in 2009, a move that boosted liquidity and market confidence during the depths of the last financial crisis.
Georgieva said she was hopeful that a consensus built around a G20 deal to allow poor countries to suspend payments on official bilateral debt would set the stage for more consensus to expand IMF resources to deal with fallout from the pandemic.