Rich countries to spend $ 30 billion in IMF cash on investments in Africa – African ministers

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A participant stands near an IMF logo during the 2018 annual meeting of the International Monetary Fund – World Bank in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS / Johannes P. Christo / File Photo

LONDON, July 9 (Reuters) – Rich countries are expected to reallocate at least $ 30 billion in fresh money from the International Monetary Fund to investments in Africa to help countries tackle the effects of coronavirus and climate change, said four African finance ministers.

In an open letter to leaders of the Group of 20 major economies, the finance ministers of Ghana, the Democratic Republic of the Congo, Côte d’Ivoire and Nigeria also urged rich countries to increase their support for the campaign. vaccination against COVID in the poorest countries.

The IMF has taken steps to implement a new allocation of $ 650 billion – the largest ever – of its reserve currency, the Special Drawing Rights (SDRs). The process is expected to be completed in August.

“Make available as soon as possible the new IMF promised issuance of special drawing rights and set a clear path for their maximum reallocation and retrocession,” the ministers wrote in the letter released on Friday.

“The urgency now is to accelerate the disbursement of these SDRs to prevent the current liquidity crisis in emerging markets from turning into an insolvency crisis. “

The economic fallout from the pandemic has exacerbated existing tensions on a number of African rulers, with Zambia, Chad and Ethiopia all seeking to review their debt burdens.

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The new SDR allocation will provide some relief, but the money is split among its members based on their stakes, meaning the rich will benefit the most, with just 7% or $ 42 billion of the total going to the 44. poorest countries.

G20 finance chiefs, meeting Friday and Saturday in Venice, have on their agenda a recommendation to find ways to ensure that a significant chunk of the $ 650 billion goes to countries most in need.

The letter, signed by Ken Ofori-Atta of Ghana, Zainab Shamsuna Ahmed of Nigeria, Nicolas Kazadi of DRC and Adama Coulibaly of Côte d’Ivoire, urges G20 leaders to lend at least $ 30 billion of this money to a new Liquidity and Sustainability Facility (LSF) and the African Stability Mechanism.

“(This) would catalyze investment in Africa, reduce liquidity premiums on sovereign bonds offered by middle-income countries and encourage green and sustainability-linked investments,” the letter said.

Rich countries should also step up their support for coronavirus vaccination campaigns.

“In June alone, there was a 290 million vaccine deficit,” finance ministers said. “We really need a billion doses donated over the next few months.”

Reporting by Karin Strohecker Editing by Gareth Jones

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