Chancellor and his G7 counterparts today agreed to back proposals
for vulnerable countries to receive further financial support
during the global pandemic.
G7 Finance Ministers agreed to support a new and sizeable
allocation of IMF Special Drawing Rights (SDR)– an asset issued
by the IMF to boost members’ reserves and provide liquidity for
vulnerable countries, freeing up resources to pay for crucial
needs such as vaccines and food imports, and improve the buffers
of emerging markets and low-income countries.
This significant step lays the groundwork for potential sign-off
at the G20 and IMFC meetings taking place during the upcoming
IMF-World Bank Spring Meetings in April. The last allocation of
SDRs was in the wake of the financial crisis in 2009.
Speaking following the second G7 Finance Ministers meeting of the
UK’s Presidency (Friday 19 March), Chancellor of the Exchequer
said:
Today’s milestone agreement among the G7 paves the way for
crucial and concerted action to support the world’s low-income
countries, ensuring that no country is left behind in the
global economic recovery from coronavirus.
As part of the SDR discussions, it was agreed that the G7 would
work with the IMF to make progress on enhancing transparency and
accountability around the usage of SDRs and explore how countries
could voluntarily recycle their SDR holdings to further support
low-income countries. The G7 agreed that the IMF should
separately work up some options for how this might be done,
without delaying agreement to a new general allocation.
Chairing the meeting, Chancellor also welcomed the continued cooperation among G7
Finance Ministers to prioritise climate change and environmental
issues in their core economic agendas, and noted the continued
commitment from G7 counterparts to reach an enduring multilateral
solution to the tax challenges of the digital economy, through
close cooperation across the G7, G20 and OECD.
-
the new allocation is subject to the IMF’s analysis of global
reserve needs which will be presented ahead of any formal
agreement
-
there have been four previous allocations of SDRs: in
1970-72; 1979-81; and two in 2009, to make a total of $293
billion allocated to date
-
the G7 comprises of the United Kingdom, Canada, France,
Germany, Italy, Japan, the United States and the EU
-
further information about the IMF can be found
here
