The International Monetary Fund (IMF) announced the biggest financial injection in its history: US$ 650 billion (about R$3.5 trillion) to heat up the world economy after the coronavirus pandemic. The value is 2.5 times higher than that released after the 2009 economic crisis and should be made available from August 23rd.
Alluding to vaccines against covid-19, the director general of the IMF, Kristalina Georgieva said that the measure will be a “dose in the arm of the world economy”.
The amount also represents 65% of the IMF’s lending capacity and will be offered as Special Turning Rights (DEG), which means that the amounts will be made available in five currencies — US Dollars, Chinese Yuan, Japanese Yen, Euro and Pound Sterling – – to increase the international reserves of the 190 member countries, without interest charges.
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For the economist and former director of the IMF, Paulo Nogueira Batista Júnior, the decision is positive if carried out under the proposed terms, as it does not imply indebtedness of the States and “helps countries to make their payments”.
The general director of the organization, Kristalina Georgieva appealed to the major powers to make their quotas available for the release of credit to poor countries, through special lines with zero interest.
Inequality in aid distribution
According to the financial agency, the most vulnerable countries would be a priority. However, about US$ 275 billion (about R$ 1.4 trillion) will be allocated to emerging countries and the rest will go to the twenty largest economic powers in the world, with the exception of China, since the division of loans follows the proportion the size of the contribution of each of the 190 members of the IMF.
The United States concentrate 16.5% of financial transfers to the organization, followed by Japan with 6.2%, and Germany with 5.3%. Brazil would have a share of 2.2%.
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South African President Cyril Ramaphosa defended that at least 25% of the total amount should be destined to African countries, almost five times more than the US$ 33 billion (approximately R$ 172 billion) announced for the entire continent. The prospect of economic growth for all African countries is 2.4% in 2021.
Nogueira Júnior says that it is unlikely that the IMF will change the logic of directing withdrawals for the current moment of crisis. Just as it must have the approval of the DEG itself, any change in the body’s internal regulations requires the approval of an absolute majority. “The Fund’s board of directors is designed so that this type of measure, to be approved, requires more than 75% of the votes, a large majority. In this way, the United States has a veto weight, as well as the Europeans and the BRICS, when they act as a group”, he highlights.
The depth of the crisis
According to the World Bank, the global economy has contracted 5.2% in the last year due to the health emergency of the new coronavirus – the biggest recession since the 2nd.The World War. For Latin America and the Caribbean, the situation was even more critical, with a 7% reduction in economies.
Of all IMF members, only China recorded growth of 2.3% of its GDP in 2020 and is forecast to increase to 8.1% by the end of 2021. Therefore, the Chinese would be excluded from the proposed financial transfer.
For economies considered emerging, such as Brazil, growth will be the slowest in the last twenty years, with an average of 4.4% in the period 2001-2021. The GDP per capita in these countries, however, will remain lower than what they had before the pandemic.
During Mauricio Macri’s government, Argentina received the largest loan in the history of the IMF, borrowing US$ 57 billion / Juan Mabromata / AFP
The recovery plan had already been proposed in 2020, but was vetoed by the Trump administration. Now, with Joe Biden in the White House, the funds will be released.
“Americans are always against DEG because it can generate competitiveness with the dollar. So they resisted in 2009 and now it has also taken a long time. They only agree when there is a very serious international crisis”, analyzes the former executive director of the IMF.
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The dollar is experiencing the biggest crisis in its history, with a 12% drop in its value in the last ten months. Some experts argue that it could be a transitory inflation, as to increase liquidity in 2020, 22% of existing US currency notes were issued.
Although there is an expectation of global economic recovery, inequality remains. According to the United Nations (UN), 120 million people live in extreme poverty. On the other hand, the biggest billionaires had record profits in 2020, a total of $1.5 trillion – equivalent to the earnings of 680 million people living in poverty across the globe.
Edition: Arturo Hartmann