“At a time when countries around the world should focus on this public health crisis, these surcharges divert billions of dollars into the pockets of the IMF here in Washington and prevent a fair recovery“Garcia said in a statement sent to Reuters.
The letter, confirmed by Reuters, said the policy could also increase the risk of sovereign debt defaults. Argentina would be the most benefited country if the IMF decides to eliminate surcharges since it is expected to disburse US $ 3.3 billion in surcharges. However, at the last IMF executive meeting, no consensus was reached on the matter.
The Argentine government is negotiating with the IMF to refinance the US $ 45,000 million that it owes to the organization, signed by the previous government of Mauricio Macri in 2018.
Nobel Prize-winning economist Joseph Stiglitz, a professor at Columbia University, and Kevin Gallagher, director of the Center for Global Development Policy at Boston University, endorsed the call for reform in an article published in October, arguing that the Surcharges hit countries when they can least afford them.
Experts said the IMF estimated that borrowing countries would pay more than $ 4 billion in surcharges, in addition to interest and fee payments from the start of the pandemic until the end of 2022.
Members of the IMF’s executive board discussed the issue of surcharges, now the Fund’s largest source of income, last month, with some members in favor of temporary relief, while others saw no need to review the policy. . In a statement, the IMF said that “some of the directors were open to exploring temporary surcharge relief to help borrowing members free up resources to address the economic and health challenges posed by the pandemic.”
“Some suggested reflecting on the best way to implement surcharges during pandemic situations,” he said.
In that regard, the agency underlined: “Directors welcomed the analysis provided by staff on the role of surcharges as part of the Fund’s risk management framework and its financial implications for members.” However, the IMF that there is also another position within the body: “Several directors did not see the need to review the policies on surcharges or change their design at this stage, given the overall low overall cost of borrowing from the Fund.”
“They pointed out the fundamental role of surcharge income to ensure adequate accumulation of risk”, Held. “Most of the other directors expressed their readiness for a more holistic and timely review of surcharge policies in the context of the Fund’s income model and overall financial outlook,” he said.
Germany, France and Britain are open to reviewing the IMF’s surcharge policy, but the United States, the Fund’s main contributor, has opposed the move.
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US lawmakers ask US Treasury secretary to back a review of IMF surcharges