“We have reached $100 billion in SDR loans. That was our goal starting in 2021, we have reached it and $60 billion of it is already in the Fund working for countries,” Georgieva said on a panel.
Reaching the target was one of the main announcements from the Paris summit, which focused on how to help low-income countries tackle their debt burden while providing more climate finance.
World Bank announces pause in debt payment
At the same meeting, the World Bank president announced a series of measures to help countries affected by natural catastrophes, including a pause in debt payments to the lender.
Some 40 leaders, including a dozen Africans, the Chinese prime minister and the Brazilian president, along with international organizations, attended the “Summit for a New Global Financial Deal” in the French capital.
Its objective is to boost financing to face crises in low-income countries, reform post-war financial systems and free funds to deal with climate change, achieving consensus on how to promote a series of initiatives that face obstacles in organizations such as the G20 , the COP, the IMF-World Bank and the United Nations.
“It is clear that the international financial architecture has failed in its mission to provide a global safety net for developing countries,” United Nations Secretary-General Antonio Guterres said, calling the system outdated, dysfunctional and unfair.
According to a draft of the summit declaration seen by Reuters, the leaders are willing to back a move for multilateral development banks such as the World Bank to put more capital at risk to boost lending.
Speaking to a group of experts on Thursday, the new World Bank president, Ajay Banga, outlined a “kit of tools” such as offering a pause on debt repayments, giving countries flexibility to redirect funds to responses emergency, provide new types of insurance to aid development projects, and help governments create early emergency systems.
“We need a strong and predictable financial safety net,” Ethiopian Prime Minister Abiy Ahmed told the conference, calling for a boost in financing below market costs and more subsidies. “African countries face unprecedented funding shortages that have exacerbated their vulnerability,” he said.
Although the new World Bank measures are designed to give developing countries a breather, there was no talk of multilateral lenders offering debt forgiveness.
China, the world’s largest bilateral creditor, has been pushing for lenders such as the World Bank or the International Monetary Fund to absorb part of the losses, which is opposed by institutions and rich countries.
