WASHINGTON/LONDON: Some Group of Seven (G7) countries are keen to back a new issuance of the International Monetary Fund’s own currency, known as special drawing rights (SDRs), to help low-income countries hit by the coronavirus crisis, a step last taken in 2009.
Officials from the US, the IMF’s biggest shareholder, had signaled they were open to a new issuance of $500 billion, sources said — another Biden shift away from Trump administration opposition.
US President Joe Biden’s administration told allies on Friday in a virtual meeting, chaired by Britain, that it was re-engaging with them to help steer the global economy out of its worst slump since the Great Depression, a contrast with the go-it-alone approach
of Donald Trump.
US Treasury Secretary Janet Yellen called for continued fiscal support to secure the recovery, saying “the time to go big is now.”
Yellen told her peers from the G7 rich democracies that Washington was committed to multilateralism and “places a high priority on deepening our international engagement and strengthening our alliances.” A G7 source, who asked not to be named, said the US told other countries it needed a few weeks to finalize the SDR increase.
The move is politically tricky for Yellen because it would provide new resources to all IMF members, including rich countries, China, and US adversaries such as Iran and Venezuela, drawing Republican opposition.
“Over the last year, the G7 has not even spoken about special drawing rights, so considering that was part of this agenda, it certainly is progress,” said Eric LeCompte, executive director of Jubilee USA Network, a charity group that focuses on reducing poverty.
“In terms of getting to a strong global stimulus, SDRs have to be a part of the equation.”
IMF Managing Director Kristalina Georgieva did not mention SDRs in a tweet about the meeting, but said that G7 members were in “full alignment” on vaccines, fiscal stimulus, climate and
“comprehensive support for vulnerable countries.”
British Finance Minister Rishi Sunak called on private creditors to give debt help to the poorest countries and said climate change and nature preservation would be priorities for Britain’s G7 presidency. Britain is due to host the first in-person summit of G7 leaders in nearly two years in June.
Yellen said the G7 should expect to see the US Treasury’s engagement on climate change to “change dramatically relative to the last four years.”
The Treasury declined comment on a Wall Street Journal report that Yellen is considering Sarah Bloom Raskin, a former deputy Treasury secretary, for a new high-level climate “czar” position at the department.