French development minister backs World Bank reforms, calls for US SDR loans By Reuters

© Reuters. French Secretary of State for Development, La Francophonie and International Partnerships Chrysoula Zacharopoulou attends the annual July 14 military parade in Paris, France, July 14, 2022. REUTERS/Sarah Meyssonnier/Pool/File Photo

By David Lawder

WASHINGTON (Reuters) – France’s development minister supports U.S. Treasury Secretary Janet Yellen’s call for the World Bank and similar institutions to dramatically increase lending, but said the United States must join France and other countries in channeling their IMF monetary reserves to the poorest countries.

Chrysoula Zacharopoulou, Secretary of State for Development, La Francophonie and International Partnerships, told Reuters in an interview on Thursday evening that the world needed to “break out” of the old model of development funding focused on individual projects to increase broad support for African and other countries. developing countries hit by global challenges.

Last week, Yellen called on the World Bank and other multilateral development lenders to revamp their business models, stretch their balance sheets and mobilize more private capital to dramatically increase lending to meet global needs such as climate change. climatic.

Yellen requested an “evolution roadmap” from the World Bank by the end of December.

Zacharopoulou, who is attending the annual meetings of the International Monetary Fund and the World Bank in Washington this week, said France was ready to help with reforms.

“Between the United States and France, we can work very well and perhaps come up with something together regarding the reform of the international financing system, so I totally agree in principle with the new ideas proposed by the secretary Yellen,” said the French minister.

Despite strong support for increased resources for war-torn Ukraine at IMF and World Bank meetings, Zacharopoulou said countries must also continue to focus on supporting other developing countries.

“We must avoid the division between North and South. We have all been affected by this crisis and poverty is increasing everywhere,” she said. “The people want us to be up to it. Otherwise, there is a real risk of social discontent everywhere.”

She said wealthier countries, particularly the United States, should contribute part of the IMF’s $650 billion distribution of Special Drawing Rights (SDR) monetary assets to trust funds for countries. the poorest.

France contributed about 20% of the $37.6 billion in SDRs it received to IMF trust funds, including the new Resilience and Sustainability Fund for Vulnerable Middle-Income Countries and Island States, and it has undertaken to increase this percentage to 30%.

The United States has not paid any part of its $101.5 billion share of the SDR allocation to trust funds, a move that would require congressional approval.

“We need the United States” to join in reallocating its SDRs to countries that need it, Zacharopoulou said. “We have to deliver.”

Yellen told a news conference on Friday that the Biden administration is seeking congressional approval to lend $21 billion in SDRs to the poorest countries through IMF trust funds. The request was made as part of a finance bill for the 2023 financial year.

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