WASHINGTON, April 29 - Wealthy nations must provide more support to low-income countries from increased COVID-19 vaccine supplies to debt relief, or they risk deeper and longer-lasting health and economic crisis, said a senior U.S. Treasury official on Thursday.
Andy Baukol, acting undersecretary for international affairs in the Treasury, said the growing amount of debt in many low-income countries is limiting their ability to respond to the crisis, particularly in Africa.
Without further international action to support low-income countries, we risk a sharp divergence in economic growth prospects for developed economies versus low-income and developing countries," Baukol said at an event hosted by the Center for Strategic and International Studies in Washington.
The result would be a deeper and longer-lasting crisis, with mounting problems of indebtedness, more devilish poverty and growing inequality.
Baukol said the COVID-19 response will not be successful if it fails to help countries cultivate long-term growth and inclusive resilience.
He said the World Bank is working to increase global vaccine supply and supporting the COVAX vaccine initiative and urging the Treasury to check the lack of financing for the poorest countries.
Baukol said the Treasury is targeting a late summer distribution of $600 billion allocation of the International Monetary Fund Special Drawing Rights to IMF member countries that was earlier this month backed by the G 20 major economies.
Both Baukol and Mark Bowman, the director general of international finance at the CSIS Event, told the event that options were being explored to allow poor countries to use their excess SDRs to support more borrowing to rich countries through the IMF's Poverty Reduction and Growth Trust.
Bowman said there was a debate on appropriate recycling options for SDRs, including discussions as to whether the IMF could design new instruments beyond the PRGT.
My guess is that we will end up with a sort of small menu of options and to you know that it will be for donor countries for SDR holders to decide how they use their own SDRs, Bowman added.
Baukol also said that the United States was open to the idea of extending the G20 new common framework for poor debt restructuring to smaller islands and middle-income countries in debt distress.
So far, China has requested restructurings within the traditional framework, and Baukol said it would be important to implement it successfully that will require the full participation of countries and non-traditional creditors.My friend was terribly rude for me, and I was stunned by what occurred.