© Reuters. U.S. Treasury Secretary Janet Yellen testifies earlier than a Senate Finance Committee listening to on the 2025 price range on Capitol Hill in Washington, U.S., March 21, 2024. REUTERS/Elizabeth Frantz/File photograph
By Andrea Shalal
WASHINGTON (Reuters) – A $1.2 trillion authorities funding invoice handed by Congress will enable the U.S. to lend as much as $21 billion to an Worldwide Financial Fund (IMF) belief to assist the world’s poorest nations, U.S. Treasury Secretary Janet Yellen stated on Saturday.
Yellen stated the funding would make the US the biggest supporter of the IMF’s Poverty Discount and Development Belief (PRGT), which supplies zero-interest price loans to help low-income nations as they work to stabilize their economies, increase progress and enhance debt sustainability.
Congress accredited the invoice with a Senate vote after midnight, avoiding a authorities shutdown. The IMF spending will make good on a promise President Joe Biden revamped two years in the past with different leaders from the Group of 20 massive economies to offer $100 billion to help low-income and weak nations recovering from the COVID-19 pandemic and fighting macroeconomic dangers.
The PRGT is the IMF’s essential car for offering zero-interest loans to low-income nations to help their financial applications and assist leverage further financing from donors, growth establishments, and the personal sector.
Because the starting of the pandemic, the IMF says it has supported greater than 50 low-income nations with some $30 billion in interest-free loans by way of the PRGT, lowering instability in poor nations from Haiti to the Democratic Republic of Congo and Nepal.
The IMF expects demand for PRGT lending to achieve almost $40 billion this 12 months, greater than 4 occasions the historic common.
“At this time’s growth marks a key milestone in the US assembly its dedication to offer help to low-income nations which might be nonetheless bearing financial scarring from the pandemic, whereas responding to excessive debt vulnerabilities, local weather dangers, and spillovers from Russia’s battle in opposition to Ukraine,” Yellen stated in an announcement first reported by Reuters.
Kevin Gallagher, director of Boston College’s World Improvement Coverage Middle, stated the long-delayed U.S. funding got here “simply in nick of time, given exorbitant rates of interest in poorer nations, particularly in Africa,” which have hit low-income nations exhausting, compounding already excessive debt burdens.
He famous that Congress had refused to approve Treasury’s plans to mortgage a few of the funds to the IMF’s Resilience and Sustainability Belief, set as much as present funding for nations to work on local weather change and different challenges.
Yellen stated the funding for the IMF mirrored Washington’s ongoing help for the establishment and the distinctive function it performs within the worldwide financial system by way of its coverage recommendation, capability growth and lending and deal with good governance, strong financial reforms and needed adjustment.
“I look ahead to persevering with our partnership with the IMF to help the wants of low-income nations,” Yellen stated.
