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US Treasury Secretary Stephen Mnuchin said Wednesday that the International Monetary Fund and the World Bank must work within their existing resources to combat the coronavirus pandemic, and urged member states to adopt a proposed framework for the debt restructuring.
In a statement to the steering committees of the two institutions, Mnuchin said they need to continue to provide funding, advice and capacity building, but must use resources wisely and plan for the transition to regular funding arrangements.
Mnuchin added that the United States supports the decision of the International Monetary Fund regarding the debts of poor countries that have been badly damaged, noting that the International Monetary Fund must continue to use the financial means available to help countries affected by the pandemic. , and that the role of the Fund is to focus primarily on economic and financial stability around the world, even if it is during its response to crises
The Minister of Finance called for a fair use of resources so that institutions are not forced to demand funds from participating countries at an early date.
World Bank approves $ 12 billion in aid for COVID-19 vaccines
The World Bank announced on Tuesday that its board of directors approved a $ 12 billion aid plan to ensure that developing countries obtain COVID-19 vaccines quickly when these vaccines become available.
He added that it is important for the World Bank to manage financial resources intelligently and transparently, with clear justifications for allocations to countries that have strong access to other sources of financing, so as not to overload shareholders with premature calls for new financing.
Mnuchin urged G20 member states to quickly ratify a framework to promote timely debt solutions and provide low-income countries with a clear path to address the debt burden.
On Wednesday, the G20 countries announced the extension of the suspension of debt service to poor countries affected by the emerging coronavirus, but the measure drew criticism from organizations and activists who considered it insufficient.
The Group of 20 major industrialized countries pledged in April to suspend the debt service of the poorest countries until the end of the year due to the sharp contraction of their economies as a result of the Covid-19 epidemic.
And the initiative was extended in a meeting on Wednesday until June next year, according to the finance ministers and the governments of the countries’ banks, after the hypothetical meeting organized by Saudi Arabia, the current president of the group.
“We have agreed to extend the suspension of debt service for six months,” Saudi Finance Minister Muhammad Al-Jadaan said.
The final statement indicated that the measure could be extended until the end of 2021 during the meeting of the International Monetary Fund and the World Bank next spring.
“In light of continued liquidity pressure, and as we gradually address debt problems, we have agreed to extend the debt service suspension initiative for six months, and then we will see at the spring 2021 meetings whether the situation it requires extending the mechanism for another six months, “the statement added.
He continued: “Given the scope of the Covid-19 crisis, difficulties (in paying) debts and deteriorating prospects in many low-income countries, we realize that debt treatment may require a case study. per case in addition to the debt service suspension initiative “.
He concluded: “In this context, we have agreed in principle on a common framework for dealing with debt outside of the debt service suspension initiative.”
