Washington: The Executive Board of the International Monetary Fund (IMF) on Monday discussed the surcharges it collects on large loans from most middle- and low-income countries that are not promptly repaid. But failed to agree to launch a formal review.
Argentina, Pakistan and others are pressing the IMF to waive — or at least temporarily waive — the surcharges, which the IMF estimates cost affected borrowers $4 billion in interest payments and fees. will come of 2022
The United States, Germany, Switzerland and other advanced economies oppose the change, arguing that the fund should not change its financing model at a time when the global economy is facing significant difficulties.
An IMF spokesman said the board discussed possible policy changes during its regular review of the global lender’s prudential balance, but failed to reach a consensus on policy revisions.
“Overall, views on the changes in the surcharge policy continued to vary, including on the merits of the temporary waiver of surcharges,” the spokesperson said.
No details were provided, but the fund said it would publish a staff paper and a press release in the coming days that would provide a full account of the board’s deliberations. No date has been set for further board discussion.
Kevin Gallagher, head of the Global Development Policy Center at Boston University, said given the global economic outlook, major shareholders should reconsider their opposition.
“This is the most urgent time to address a fundamentally flawed business model where the IMF is generating revenue by taxing those most in need,” Gallagher said.
But it was remarkable, he said, that IMF shareholders had failed to reject an assessment outright.
“One silver lining is that the largest shareholders did not have enough power to kill the proposal,” he said.
Impasse between the IMF and Pakistan continues.
Talks between Pakistan and the IMF have stalled after the world lender pressed Islamabad for policies and reforms needed to keep the bailout program targets on track and complete the pending ninth review.
An important objective of program evaluations in Pakistan, as in all program countries, is to assess program performance, as well as, with respect to the future, whether the program is on track or policy to meet program goals. Actions are needed, advancing reform goals, and maintaining macroeconomic stability going forward,” said Esther Perez Ruiz, IMF Resident Chief in Pakistan, in a written response.
The IMF’s review for the release of the next tranche under the bailout funding has been pending since September.
Broader agreement on a revised macroeconomic framework could pave the way for consensus building on a staff-level agreement to complete the 9th review under the $7 billion Extended Fund Facility.
