According to the head of the IMF, the implementation of the new Special Drawing Rights (SDR) allocation will allow more funds to be mobilized to address the current global economic and health crisis.
|The International Monetary Fund headquarters in Washington. (Source: euractiv)|
General Director of the International Monetary Fund (IMF) Kristalina Georgieva on January 18 announced that this financial institution needs more financial resources to support countries in debt, citing difficult global economic prospects. and the growing gap between rich and poor countries. Therefore, Ms. Georgieva believes that the Special Drawing Right (SDR) is a tool to help solve the fund’s difficulties of this organization.
According to the head of the IMF, the implementation of the new SDR allocation will allow more funds to be mobilized to resolve the current global health and economic crisis, while also spurring actions towards the economy. digital and green.
The United States – the IMF’s biggest financial contributor, has long prevented the implementation of new SDR allocation – a move similar to allowing the central bank to print money, because the IMF is, by regulation, allocating SDRs to member states in proportion to their share of the country.
However, Ms. Georgieva said that in recent times the IMF has gradually increased its funding for developing and emerging economies, of which funding is raised through a $ 20 billion contribution of current SDR member countries.
She said that the SDR will continue to play an important role, but further fundraising work is needed to expand the capacity to support countries.
In fact, the implementation of the SDR allocation has never been officially discussed among the IMF member countries. She said a number of member countries are continuing to discuss SDR in a possible direction.
The General Director of IMF expressed his expectation that the Group of 20 leading emerging and developed economies will continue to postpone the repayment period for the poorest countries, which is expected to be due next June, however, the postponement This repayment will also depend on how quickly COVID-19 vaccination is given over the next few months.
Meanwhile, at an online press conference with Ms. Georgieva, Swedish Finance Minister, Magdelena Andersson, head of IMF Executive Board, confirmed that it is clear now that the demand for liquidity is still very large and she will consult with member countries on options to expand liquidity.
Created by the IMF in 1969 as an international reserve asset, however, it was not until 1973, when the Bretton Woods system of fixed interest rates collapsed, that the SDR was redefined by the IMF as a basket of currencies.
In essence, the SDR is not a specific currency like the US dollar, the Japanese yen or the Chinese yuan, but the SDR is known as a member nation’s reserve asset. units converted.
With the SDR, a member country can add directly to the state foreign exchange reserve, lend to other member countries or exchange it for a “free-use foreign currency” to serve the state’s foreign exchange reserve mine.
Up to now, the IMF has just made 4 allocation. The first allocation is the period 1970-1972 with a total SDR allocation of 9.3 billion SDR; a second allocation for 1979-1981 with a total SDR allocation of 12.1 billion SDR, a third allocation of 161.2 billion SDR made on August 28, 2009, and one allocation Especially, the 21.5 billion SDR was implemented on 9/9/2009, bringing the total SDR allocated so far is 204 billion SDR (equivalent to 318 billion USD).
In Europe, the governments of the Eurozone countries are concerned that the COVID-19 pandemic will strongly affect the weakest economies, thereby widening the gap between member countries. EU and brought to life memories of the public debt crisis that this region experienced more than 10 years ago.
At the online meeting of the Finance Ministers of Eurozone countries on January 18, the ministers shared that the rising public debt and the slow increase in salary were the two top concerns of officials in the period. current epidemic.
Economic Commissioner of the European Union (EU), Mr. Paolo Gentiloni said that the current crisis is deepening the injustice that exists, which is gradually improving before the epidemic.
Greece, Spain and Italy are currently three countries in the Eurozone with record high public debt levels, but worse than these are countries whose economies heavily depend on tourism are in trouble due to the COVID- 19.
Meanwhile, according to the forecast in November 2020 of the European Central Bank (ECB), France’s budget deficit by the end of 2020 will reach 10.5% of GDP, while this figure is in Spain. Nha is 12.2% and Germany is 6%. Normally, this level of inflation will push the country’s financial market into chaos, threatening the liquidity of the first countries and the future of the euro in general. However, at the present time, the ECB has supported the financial market by purchasing the majority of public debts.
Some economists believe that the ECB’s intervention, coupled with the expansion of the COVID-19 vaccination program by countries in the region, will reopen economies, will be enough to bring the European economy. soon recover.