Press Release: Call for Swift Approval of Massive, Worldwide Aid from IMF

For Immediate Release: August 5, 2020
Contact: Kevin Cashman, 860-593-0839, media@epsusa.org

Economists for Peace and Security (EPS) called for approval, as soon as possible, of the massive resources worldwide that were proposed by IMF Managing Director Kristalina Georgieva in March. On Friday, the US House of Representatives passed legislation mandating that the US government agree to such action by the IMF.

“There are millions of people whose lives are at risk from the pandemic and the deep recession in the global economy — with the outlook worsening for 2020 and 2021,” said Professor Linda Bilmes of Harvard, co-chair of EPS. Many could be saved by the large allocation of resources that the US House of Representatives has voted to support.”

Dr. Bilmes emphasized that these resources will not cost the US government a single dollar. Last week, the non-partisan Congressional Budget Office made this determination, finding that it had zero cost to the US budget.

The bill that passed the US House of Representatives called for the US government to “support the issuance of a special allocation of not less than 2 trillion Special Drawing Rights so that governments are able to access additional resources to finance their responses to the global COVID-19 pandemic.”

Currently, the US government is blocking the issuance of these Special Drawing Rights (SDRs). But virtually all of the other 189 member governments of the IMF support such an issuance, so it will almost certainly happen once the US government allows it. The purpose of the House legislation, which was attached to another bill, was to mandate that the US government stop blocking the allocation.

Special Drawing Rights are an internal currency of the IMF, but according to IMF rules they can be exchanged among member countries for several hard currencies, including US dollars and euro.

“We live in a globalized, interconnected world. It is in America’s best interest to help all countries protect the health and wellbeing of their populations,” said Bilmes. "Fortunately, the IMF can provide these resources at no cost to the United States or to other member countries. They are not loans and do not have to be repaid.”

Bilmes noted that economic fallout from the pandemic has created a crisis in many countries. People are dying from lack of access to treatment and also because they cannot afford measures to slow the spread of the disease. Furthermore, as the world economy shrinks, economies in recession run short of foreign exchange to import medicines and medical equipment. The situation can worsen, she said, as economies fall deeper into recession and face balance of payments crises, as well as fiscal and debt crises. The SDR issuance, she said, can contribute to saving millions of lives, by helping to avert these economic and medical disasters.

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