27th Sep 2023

G20 leaders nearing deal on new-model IMF

  • The stage is being set for a deal on the IMF and tax havens (Photo: EUobserver)

Leaders of the G20 industrial nations finished breakfast on Thursday (2 April) morning at London's Excel Centre and began the final phase of tough negotiations on how to reform the International Monetary Fund (IMF) and boost its resources.

"You need to appoint someone democratically at the IMF," said Irish campaigner and former pop singer Pop Geldof on the summit's sidelines.

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Mr Geldof, who for many years has put pressure on Western leaders to increase aid to developing countries, said the days of European and American domination of the world's multilateral lenders, such as the IMF and the World Bank, have to come to an end.

He added that leaders must live up to aid commitments given at the 2005 G8 meeting held at Gleneagles in Scotland at which they promised to increase aid by $50 billion (€37 bilion) annually by 2010.

G20 leaders are currently negotiating the exact amount of new funding to be handed to the IMF, following an agreement by G20 finance ministers on 14 March to make a "substantial increase."

Last month the US surprised the world by saying the fund's resources should be tripled to $700 billion (€524 billion).

UK financial secretary to the treasury Stephen Timms told reporters on Thursday at the summit that he was confident G20 leaders would agree on a final figure for the summit's communique.

"We are certainly looking at a doubling," he said. "We will have a figure by the end of the day."

Douglas Alexander, the UK's secretary of state for international development, told reporters that the partial sale of the IMF's sizeable gold reserves was being considered as a means to supplement the fund's lending capacity.

Beyond stigma

He added that past hang-ups associated with seeking a loan from the IMF were disappearing rapidly and he welcomed Mexico's announcement on Wednesday to apply for a $47 billion credit line.

"The new facility that Mexico is taking advantage of shows we have gone beyond the era of stigma," said Mr Timms.

Mexico's move is significant, as it marks the first time a Latin American country has applied for a loan from the Washington-based multilateral lender since it fell out of favour with the region in the 1990s.

Mr Timms also said that leaders were discussing ways to fight the growing threat of rising protectionism since the onset of the financial crisis, suggesting the final communique would contain measures to "name and shame" states implementing new trade barriers.

He was confident that the Doha round of global trade negotiations could be completed this year saying he felt there was an imminent "window of opportunity."

Tax-havens are also firmly on the agenda of Thursday's meeting.

Mr Timms indicated that leaders would agree on a system of sanctions for those states that refused to share banking information, adding that the list of states to receive such sanctions would be produced in "due course."

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