Liberia is set to receive roughly US$350 million of the US$650 billion from the International Monetary Fund (IMF) to help poor countries.
According to the IMF, the amount is expected to boost Liberia’s reserve and support economic growth through infrastructure investment in the post-COVID-19 era and support the fight against COVID-19 through vaccinations.
The IMF aid fund will also help to liquidate domestic debt as a form of economic stimulus and pay down debt to the IMF.
The Liberian government, led by the Ministry of Finance and Development Planning, will negotiate with the IMF as to the usesof the fund.
The IMF’s decision comes at a pivotal moment, as COVID-19 infections continue to spread among populations that have not been inoculated and as more contagious variants of the coronavirus are posing new health threats. The pandemic has drained the fiscal resources of poor countries over the past year, and the IMF projected this week that faster access to vaccinations for high-risk populations could save 500,000 lives in the next six months.
The new allocation of “Special Drawing Rights” would be the largest such expansion of currency reserves in the IMF’s history. If approved by the group’s board of governors, as is expected, the reserves could become available by the end of next month.
Managing Director of the IMF, Kristalina Georgieva, is quoted as saying, “This is a shot in the arm for the world.” The SDR allocation will help every IMF member country – particularly vulnerable countries – and strengthen their response to the Covid-19 crisis.”
Ms. Georgieva made the proclamation when finance ministers and central bank governors of the group of 20 nations were gathering in Venice to discuss international tax policy, climate change, and the global economic response to the pandemic. The IMF, established in 1944 to try to broker economic cooperation, has warned of a two-track economic recovery, with poor countries being left behind, while advanced economies experience rapid expansions.
Prior to the meetings, Treasury Department officials said expanding access to vaccines would be a central topic of discussion. It is also a potentially contentious one, as some developing countries have suggested that advanced economies are not doing enough to ensure fair distribution of vaccines. “The immediate priority for developing countries is widespread access to vaccines that match their deployment programs,” David Malpass, President of the World Bank, said in a speech in Venice on Friday.
Mr. Malpass called on G20 countries to share doses and remove all trade barriers to exporting finished vaccines and their components. He noted that the pandemic had aggravated structural weaknesses that had dogged developing countries for years. “Even as that is accomplished,” Mr. Malpass said of expanded vaccine distribution, “development faces years of setback and struggle.”
It remains to be seen how far the $650 billion will go to help developing countries as they race to vaccinate people before new variants of the virus take hold, including the Delta variant, which has plunged many countries back into a health crisis.
The United Nations Conference on Trade and Development called this year for $1 trillion worth of Special Drawing Rights to be made available by the IMF as a “helicopter money drop for those being left behind.”