Sen. Bernie Sanders (I-Vt.) and Rep. Ilhan Omar (D-Minn.) in a Wednesday letter addressed to Georgieva and David Malpass, president of the World Bank, called on international financial organizations to consider “extensive debt forgiveness” for more than 70 of the world’s poorest countries. The letter, which also called for significant fiscal stimulus to help stabilize the global economy, was signed by more than 300 lawmakers from over two dozen countries, including former Argentine president Carlos Menem, former Greek finance minister Yanis Varoufakis and Sen. Richard J. Durbin (D-Ill.), one of the most senior members in the U.S. chamber.
“The vulnerable communities that lack the resources and privileges to adopt adequate public health measures will ultimately face the disproportionate burden of coronavirus,” read the letter, a draft of which was shared with Today’s WorldView. “Such harm means that global supply chains, financial markets, and other interconnected exchanges will continue to be disrupted and destabilized.”
The two U.S. lawmakers called for a technocratic instrument in the IMF’s tool kit known as special drawing rights, or SDRs, that could bring hundreds of billions, even trillions, of dollars of new liquidity into the global economy. The last time the IMF allowed for a major infusion of additional SDRs was in 2009 as part of a $1 trillion injection into the global economy that followed the financial crisis.
The IMF’s gold reserves have soared $19bn since #coronavirus pandemic. This is more than the entire debt the poorest countries owe. The IMF should use these windfall profits to #CancelTheDebt to avert catastrophic loss of life in developing countries
Sanders and Omar, widely seen as occupying the left flank of Democratic Party politics, are pushing ideas about debt relief and crisis spending that are becoming increasingly mainstream. Economists and policymakers to their right have already made similar calls for a new round of SDRs, which would not make much of a difference for taxpayers in wealthy nations. Boosters of the idea say that rich countries could voluntarily transfer some of the funds generated by the SDRs — which are allocated on the basis of IMF quotas that give richer nations much larger shares — to poorer ones.
“Taking commonsense measures to cancel debts and provide financial stability — steps which do not cost U.S. taxpayers a penny — is the very least we can do to prevent an unimaginable amount of poverty, hunger, and disease that could harm hundreds and hundreds of millions of people,” Sanders said in an email to Today’s WorldView.
So far, the Trump administration, whose Treasury Department carries enormous influence over the IMF, has balked at the idea. One reason for its opposition is an unwillingness to create a mechanism that boosts the foreign reserves of adversarial countries such as China, Iran or Venezuela without forcing them to make any concessions…
For the letter’s signatories, debt forgiveness is an essential plank of a broader global recovery. “What this crisis shows us is that we are all in this together, as a global community,” said Sanders. “We have got to show unprecedented compassion, solidarity, and cooperation right now, because this pandemic has revealed for everybody that we are only as safe and healthy as the most vulnerable among us.”
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