The UK and France said on Saturday they would mobilize US$4 billion for poor countries by giving up part of a recent IMF allocation of an international reserve asset.
“With this initiative, Britain and France show the necessary solidarity between nations ... I hope all countries that can do it will follow this initiative,” French Finance Minister Christine Lagarde said in a statement.
Dominique Strauss-Kahn, the IMF’s chief, welcomed the plan to help support the streamlined lending for poor countries, which he has called the “innocent victims” of a global crisis not of their making.
“This is incredibly helpful for low-income countries,” Strauss-Kahn told reporters. “It’s a beginning and I hope that other countries including the richest countries in the world will follow the same route.”
The two countries said they would each donate US$2 billion in special drawing rights (SDRs), a special IMF asset, as loan resources to the fund to help support lending to low-income countries hit by the economic crisis.
International aid agency Oxfam International has called for the world’s developed nations to transfer half of their SDRs — equivalent to around US$89 billion — to poor countries as part of broader development financing.
“Rich countries need to go much farther than this 4 billion dollars,” Oxfam International policy adviser Caroline Pearce said after the announcement.
The IMF in July committed to step up concessional lending to poor countries to US$17 billion by 2014 including US$8 billion by 2011.
The UK and France, members of the G7 richest countries, made the announcement after G7 finance chiefs met in Istanbul, Turkey’s financial center, ahead of IMF and World Bank annual meetings next week.
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