US lawmakers call for a review of IMF surcharges

The politics of International Monetary Fund ( IMF) to collect significant surcharges to indebted countries was rated as “unfair and counterproductive” in a letter US lawmakers sent to the United States Secretary of the Treasury, Janet Yellen, with the aim of asking you to endorse a review of that measure.

“These surcharges divert billions of dollars into the pockets of the IMF To who Washington and prevent a fair recovery, “said one of the signatories. Argentina would be one of the countries that would benefit the most if the IMF eliminated the policy of surcharges.

The request sent to Yellen was signed by 16 Democratic lawmakers What Jesus Garcia Y Alexandria Ocasio-Cortez. In the text, lawmakers called the policy “unfair and counterproductive” and stressed that the countries have the necessary resources to combat COVID-19 pandemic. The letter also warned that overcharges could also increase the risk of sovereign debt defaults.

“At a time when the countries of everyone 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.

IMF surcharges

This is not the first time a claim has been made to review the surcharges, the Nobel Prize-winning economist Joseph stiglitz, Y Kevin gallagher, director of Policy Center from Global Development of the Boston University, backed the call for reform in an article published in October, arguing that the surcharges affect countries at least they can afford it.

Although Germany, France Y Britain are open to review the surcharge policy of the IMF, The United States, the main contributor to the Bottom, opposed the measure. The Bottom estimated that the debtor countries would pay more than $ 4 billion in surcharges, in addition to interest and fee payments from the beginning of the pandemic until the end of 2022.

Argentina and the IMF surcharges

Argentina it would be the most benefited country if the IMF removed the surcharges as it is expected to disburse USD 3.3 billion in surcharge for the loan of USD 45 billion owed to the body, signed by the previous government of Mauricio Macri in 2018. However, the last IMF executive meeting did not reach consensus on the matter.

In December, the issue of surcharges, currently the agency’s largest source of income, was discussed. In this regard, the agency underlined: “Directors welcomed the analysis provided by staff on the role of surcharges as part of the risk management framework of the Fondo and its financial implications for members ”.

Anyway, the IMF acknowledged that also there is another position within the organization: “Several directors nor saw the need to review the policies on surcharges or change your design at this stage, given the low overall total cost of borrowing from the Fund. They pointed out the fundamental role of income from surcharges to guarantee an adequate accumulation of risk ”, added the international organization.