The seven largest advanced economies in the world have agreed to support the first expansion of the International Monetary Fund’s reserves since 2009, a measure designed to help developing countries deal with the coronavirus epidemic, the United Kingdom said Friday. Said to
The United Kingdom – which is chairing the Group of Seven (G7) this year – said the finance ministers of the member states agreed to support a “new and substantial” increase in the amount of Special Drawing Rights (SDRs) in English. Has IMF’s own currency.
British Finance Minister, Sage Sanak said, “Today’s agreement between the G7 paves the way for significant and joint action to support the world’s low-income countries, leaving no country behind in global economic recovery is.”
The news was celebrated by IMF managing director Kristalina Georgieva, who said the G7 Finance Ministers’ meeting was “productive”.
The $ 500 billion expansion in SDR was made last year by then-President of the United States, Donald Trump. Last month, US Treasury Secretary Janet Yellen said she wants an extension, but wants more transparency into how SDR will be used and traded.
United States sources familiar with the G7 talks said that an increase of about $ 650 billion was under discussion.
Even if Yellen reaches a consensus for an SDR allocation that falls below the threshold requiring approval by the US Congress – about $ 679 billion based on current exchange rates – US domestic policy is complicated.
Republican congressmen have already complained that the measure will no longer reach the countries that need the most money, but will provide free cash reserves to China, Iran and other countries seen as opponents by the Trump administration.
Any extension of the SDR will need to be agreed with countries outside the G7, including China, before the April IMF meeting.