The IMF will launch a USD100 billion green fund as part of global efforts to stimulate economic growth, IMF Managing Director Dominique Strauss-Kahn said Jan. 30. ‘There is a consensus around the size of the fund,’ Strauss-Kahn said during a panel discussion at the World Economic Forum in Davos, adding that the fund should help finance low-carbon projects. He said that developing countries would need financial help to tackle climate change while rich nations have taken on higher debt in reaction to the global financial crisis. Strauss-Kahn also said the world needed to “think outside the box and come up with innovative ways to provide the money.” The ONE campaign said that large sums of financing are still needed on top of the IMF fund to help poor countries deal with the effects of climate change immediately. “As the fund would give concessional loans this does not replace the need for significant additional grant financing to help the poorest countries adapt right now to the impacts of climate change,” said the group.
The IMF and the World Bank’s International Development Association have agreed to support USD1.9 billion in debt relief for the Republic of Congo. “This is a recognition of the remarkable progress made by the Congolese authorities in undertaking major and difficult reforms that have led to significant improvements in the country’s fiscal and economic management,” World Bank Country Director for the Republic of Congo Marie-Francoise Marie-Nelly said in a statement. The relief included USD255.2 million from the IMF and the World Bank, but the announcement triggers debt relief from other creditors as well, AFP reports. The relief includes USD1.7 billion from the Enhanced Heavily Indebted Poor Countries (HIPC) initiative and USD201.3 million from the Multilateral Debt Relief Initiative (MDRI).
The IMF will decide later this month on whether to restore Zimbabwe’s voting rights in the fund, Finance Minister Tendai Biti told Reuters in an interview, adding that the move was in response to positive reforms implemented by the unity government formed last year by arch rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai. “There is a general understanding and support for the restoration of Zimbabwe’s voting rights. The IMF executive board will meet this month to decide on the issue,” Biti said. “The U.S. will support us, and we made similar requests to Germany and the UK, who will also support us in this regard.” Zimbabwe, which Biti said needs at least USD8 billion to reconstruct its battered economy, had its voting rights suspended by the IMF in 2003 over policy differences with Mugabe’s government.
European officials will urge Group of Seven finance ministers to avoid disrupting markets as governments prepare to exit stimulus measures, according to a draft document prepared for this week’s G-7 meeting in Canada. “Market volatility, in particular in the foreign-exchange market, could destabilize the nascent global recovery by placing growth on an unbalanced path and trigger unwelcome protectionist reactions,” according to the draft, which is dated Jan. 26 and was obtained by Bloomberg News. The document represents Europe’s position for the Feb. 5-6 meeting of finance chiefs from the G-7 major industrialized nations. As the economic recovery gains momentum, policy makers around the world are debating the timing for withdrawal of the USD2 trillion in emergency measures enacted to fight the worst global recession since World War II. While the IMF last week raised its global growth forecast, Managing Director Dominique Strauss-Kahn warned against ending stimulus programs too soon.
South Korean President Lee Myung-bak has proposed building a “global financial safety net” to insure against risky capital flows and help mitigate global imbalances in trade and development. In an address to the World Economic Forum in Davos, Switzerland, he also said the Group of 20 will reach out to nonmembers, private sectors and other international organizations as it seeks to cement its legitimacy and representation as a genuinely premier forum for global economic cooperation. Lee used the special address to hundreds of top policy makers, business leaders and civil society representatives to outline Korea’s plan for the G20 summit to be held in Seoul in November. He said the problem of “too-big-to-fail” institutions will be a key theme of financial reforms for the Seoul summit. Seoul played a leading role in creating the Chiang Mai Initiative, a USD120 billion regional reserve arrangement of Korea, China, Japan and 10 Southeast Asian countries.