Connect with us

International

$ 650 billion IMF currency hike won’t save debt-ridden countries, economist says

Avatar

Published

on


Argentine Vice President Cristina Fernandez de Kirchner (R) chairs a virtual senate session at the Congress in Buenos Aires on December 4, 2020.

JUAN MABROMATA | AFP | Getty Images

The LONDONR International Monetary Fund looks set to issue $ 650 billion in cash assistance to countries hit hard by the coronavirus pandemic, but those with volatile debt burdens may try to reap the rewards.

Treasury Secretary Janet Yellen indicated last week that the US is on board with the allocation of Special Drawing Rights (SDRs), which are reserve assets that countries can use to increase their foreign exchange assets, such as gold. and US dollars.

On Wednesday, the G-20 (Group of Twenty) major industrial nations issued a joint statement supporting the proposal, which will now need approval from the IMF Board.

IMF Managing Director Kristalina Georgieva said after a discussion among the Fund’s 190-member management in March that the proposed SDR allocation would “add a substantial, direct increase in liquidity to countries, without adding to the debt burden”.

“It will also free up much-needed resources for member states to help fight the pandemic, including supporting vaccination programs and other urgent measures,” she added.

SDRs are usually distributed according to quotas of IMF member countries, which are often based on the size of GDP. This has led to criticism that developed economies and richer emerging markets receive a larger share of allocations.

But in relative terms, poorer, heavier-indebted emerging economies will receive the biggest boost in gross international reserves as a result of this SDR allocation, according to Emerging Markets Economist Chief Economic Officer William Jackson.

“A $ 650 billion allocation would double Zambia’s gross international reserves and increase reserves by more than 10% in Argentina, Ethiopia, Ecuador, Kenya, Ghana and Sri Lanka, which face very high borrowing costs in global capital markets, “Jackson said in a research note Wednesday. Otherwise, he stressed, China’s gross international reserves would increase by only 1%.

Jackson noted that the increase in reserves would free central banks to provide foreign currency liquidity to citizens, allowing for an increase in imports and helping to finance external debt repayments. This would pave the way for a stronger revival of demand and provide a “cushion” as external financing conditions tighten, according to Jackson.

There is no solution to volatile debt burdens

Smaller border markets like Kenya and Ghana that still endure particularly high costs of foreign borrowing would experience welcome relief, Jackson said, but he argued that member states in general would have benefited more if the IMF had taken this step. action at the height of financial market concern last year.

A second point he stressed was that increasing foreign currency liquidity “will not prevent the need for debt restructuring in countries where debt trajectories are on volatile paths”.

Two such countries would be Argentina and Ethiopia. In a joint statement during the Spring Summit on Wednesday, Argentina and Mexico argued that middle-income countries should have greater access to the SDR and proposed the establishment of new mechanisms within international institutions that provide for regular debt restructuring for such nations.

In late March, Argentine Vice President Cristina Fernandez de Kirchner reportedly said the country would not be able to pay its $ 45 billion debt to the IMF after it had already breached its debt three times this century.

Ethiopia has sought to use the G-20 Common Framework for Debt Management beyond the Debt Service Suspension Initiative (DSSI). The Joint Framework is an agreement between the G-20 and the Paris Club countries to organize and coordinate debt treatment for up to 73 low-income countries that are eligible for DSSI and aims to help with significant debt restructuring. to restore stability.

Ethiopia was requested to use the Common Framework Fitch will lower its credit rating at CCC from B in February, noting that the movement “clearly increases the risk of a predetermined event”.

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos



picture credit

ExBUlletin

to request, modification Contact us at Here or [email protected]