WASHINGTON (Reuters) – Four groups of influential Democratic lawmakers urged U.S. Treasury Secretary Janet Yellen on Tuesday to back the issuance of $2 trillion in additional emergency reserves by the International Monetary Fund to help poor countries still struggling with the COVID-19 pandemic.
The chairs of the Congressional Progressive, Black, Hispanic, and Asian Pacific American Caucuses told Yellen in a letter seen by Reuters that U.S. backing for a new allocation of IMF reserves would provide needed support for hundreds of millions of people in developing countries, where vaccination rates lag far behind those in advanced economies, while underpinning global growth.
In the letter the lawmakers welcomed Yellen’s support for a $650 billion allocation of IMF Special Drawing Rights (SDRs) in August, and asked her to support a measure passed by the House of Representatives in July that called for issuance of 1.5 trillion more SDRs, valued at around $2 trillion.
“A new issuance of 1.5 trillion SDRs remains a vital tool for this administration’s efforts to crush the coronavirus and build back better, both at home and abroad,” they wrote.
A congressional aide said “aggressive action” was needed to address the pandemic’s global impacts, particularly for low-income countries, and the caucuses want to ensure support from President Joe Biden’s administration for additional SDRs, given “the potential to advance racial justice.”
The lawmakers’ letter said that this year’s IMF SDR allocation had been used in full by many of the world’s most vulnerable countries, including Chad, Lebanon, Ecuador, Malawi, Tunisia and Ethiopia.
The amount of SDRs used in the three months since the issuance was 21 times greater than what had been used in the first three months after the last issuance in 2009, they said.
Lawmakers are seeking Yellen’s support as they work to finalize appropriations for the coming fiscal year. The House measure must still be passed by the Senate.
The IMF has estimated that developing countries will need some $2.5 trillion to cover their financing needs in the wake of the pandemic and the economic disruption it has caused.
The August issuance was the IMF’s largest-ever distribution of monetary reserves, providing additional liquidity for the global economy, supplementing member countries’ foreign exchange reserves and reducing their reliance on external debt.
(Reporting by Andrea Shalal; editing by Grant McCool)