I.M.F. Presents Plan to Help Poor Countries During Pandemic

In Washington, the universal nature of the proposed allocation has stirred up opposition from Republicans, who argue that it would burnish the finances of American adversaries like China, Russia and Iran while doing little to help poor countries.

Senator John Kennedy, Republican of Louisiana, this month introduced a bill that would block special drawing rights allocations from going to “perpetrators of genocide and state sponsors of terrorism” without approval from Congress.

The Trump administration opposed the proposal on similar grounds, while the Biden administration has embraced the idea as a means of aiding developing countries at no cost to taxpayers.

Debt is at the center of concerns about low-income countries, given that many entered the pandemic already straining under severe burdens.

In 2019, 25 countries — most of them in Africa and South Asia — were spending more on debt payments to major financial institutions in wealthy nations than on education, health care and support programs for impoverished communities, according to a UNICEF study.

Zambia’s external debt payments have surged to nearly 34 percent of its total government revenues this year, from less than 2 percent in 2011, according to data tabulated by the Jubilee Debt Campaign, an international advocacy group that argues for debt forgiveness. Pakistan’s external debt payments have soared to 35 percent from less than 10 percent over the same period.

The pandemic has drastically worsened the situation, destroying revenues at the same time that it has increased demand for government services.

Article source: https://www.nytimes.com/2021/06/24/business/international-monetary-fund-sdr.html