Financing for Development in the Era of COVID-19 and Beyond Initiative - Meeting of Heads of State and Government on the International Debt architecture and Liquidity

Remarks by IMF Managing Director Kristalina Georgieva

March 29, 2021

Mr. Secretary General, Prime Minister Holness, Prime Minister Trudeau. Thank you for keeping up momentum to build consensus on this important agenda. Let me make three points.

First, the global economic outlook is improving—thanks to incredible efforts on vaccines, and unprecedented actions by governments and the international community.

But prospects for recovery are diverging dangerously.

Emerging and developing countries are at risk of languishing with weaker growth. Relative to pre-crisis projections and excluding China, this group is projected by 2022 to have cumulative per capita income losses as high as 20 percent versus 11 percent in advanced economies.

Which brings me to my second point: We need a comprehensive approach to support vulnerable countries and people. It must include domestic measures to improve revenue collection, spending efficiency, and the business environment, as well as substantial international support, includinggrants and concessional lending. We will do our part through concessional lending.

And the good news today is that we have advanced on the consideration of a new SDR allocation of US$650 billion to address the long-term global need for reserve assets. I will present a formal SDR proposal in June, including measures to enhance transparency and accountability.

A new SDR allocation would support the global recovery, by providing a substantial direct liquidity boost for all IMF members without adding to debt burdens—and freeing up resources for countries under pressure to do what is right: to take care of people and businesses.

In parallel, we are exploring options for members with strong financial positions to reallocate SDRs to support vulnerable countries. 

My third point: action on debt in an integral part of this comprehensive response.

The DSSI provided valuable relief to eligible countries of around US$5.7 billion in 2020 and it was rightly extended to June 2021. We strongly support a further extension until the end of 2021, which is currently under consideration by G20 members. I hope they will say yes to that.

But the DSSI is not the solution to unsustainable debt. We continue to strengthen the international framework for sovereign debt resolution, improve debt transparency, and come up with new ideas around which we could bring everybody on board.

We also have the implementation of the Common Framework for debt treatments—it is paramount to make it work. We now have three requests: Chad, Ethiopia and Zambia. And it is very important that we deliver on this request and that all creditors—official, private—participate so we build confidence for countries to use this new tool to address debt challenges, and prevent delays in taking the necessary actions.

Let me finish by saying that throughout this crisis, the IMF scaled up support for our members. We did it to ease the recession, and we will do it again to secure the recovery.

Thank you