U.S. Treasury's Yellen says Congress needs to fund debt relief programs

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen told lawmakers on Thursday that debt relief for poor and developing countries would be hampered without new funding, while $2.7 billion in current unmet U.S. commitments to the World Bank, International Monetary Fund and other institutions would grow.

Yellen, in prepared remarks to a U.S. House of Representatives Appropriations subcommittee, said that the G20 Debt Service Suspension Initiative for poor countries and a new debt restructuring ‘Common Framework’ both need funding from Congress.

“Without new funding, the United States could be forced to delay the multilateral debt process under the Common Framework and charge much higher interest rates on DSSI debt service suspensions,” Yellen said.

Yellen said the Treasury’s budget request for fiscal 2022 includes funding for these initiatives as well as U.S. contribution commitments to international financial institutions, such as the World Bank’s International Development Association fund for the poorest countries.

She said the budget plan also includes funding for the IMF’s Poverty Reduction and Growth Trust, a fund that aids poor countries. It also would allow the United States to lend IMF Special Drawing Rights through the trust to poorer countries that need them. The IMF is working on a $650 billion distribution of the SDR currency assets to all of its members later this year.

“This would be America’s first direct contribution to the Trust, and it will also help establish a trust fund that would support the recovery of low- and middle-income countries, as well as broader economic reforms that would improve the lives of their people.

She also said Treasury’s budget request includes roughly $1 billion to help developing countries adapt to climate change, including expanding clean energy and conserving rainforests, which absorb carbon emissions.

Source: Read Full Article