IMF’s new reserves allocation ‘not the solution’ to financing needs: Gopinath

A second issuance of International Monetary Fund reserves would not address the financing needs of developing countries because it would go mainly to rich countries and a new lending mechanism for existing reserves is still being developed, the IMF’s No. 2 official told Reuters on Tuesday.

IMF First Deputy Managing Director Gita Gopinath said in an interview that she hoped for “concrete action” by the Fund’s April Spring Meetings on the planned Resilience and Sustainability Trust.

Most of last year’s $650 billion allocation of IMF Special Drawing Rights to went to wealthy IMF member countries. The new trust is aimed at channeling part of their share to poorer countries.

Asked if a second SDR allocation would be beneficial, Gopinath said: “Because the SDR allocation is not very targeted, we don’t think that that’s the solution for this. So no.”

She said other programs targeted at low-income countries, including efforts to improve participation in a G20 debt restructuring framework, would be more beneficial to poor countries, especially as interest rates rise.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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