April 19, 2022

G24 urges IMF quotas review

IMF downgrades Nigeria’s 2024 economic growth forecast to 3% 

Calls for a 3rd Board Chair for Africa

Emma Ujah, Abuja Bureau Chief

The group of 24 countries (G24) has called on the International Monetary Fund (IMF) to take immediate steps towards a General Quotas Review (GQR) in order to increase its resource base, while urging a temporary suspension of surcharges or a reduction of the same.

The G-24 is a group of countries that work together to coordinate the positions of developing countries on international monetary and financial issues.

This was contained in a communiqué at the end of its meeting, as part of the on-going World Bank /IMF Spring Meetings in Washington DC, United States of America.

The group said, “We call on the IMF to urgently review its sources of revenues, which consists mainly of income from lending, including surcharges. This review should assess the appropriate burden-sharing among IMF’s member countries to support the sustained provision of a global public good. In this context, we call on the IMF to correct the regressive and procyclical character of its surcharge policy.

 “It should consider suspending or temporarily substantially reducing surcharges to support countries with severe balance of payments constraints.

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“We call on the IMF to set clear timelines and deliverables to ensure the timely completion of the 16th General Review of Quotas (GRQ) no later than December 15, 2023. We call for an increase in the IMF’s quota resources to ensure an adequately resourced IMF that is less dependent on temporary borrowed resources to boost its lending capacity in times of crises.

“ Failure to deliver a quota increase will result in a sharp decline in the IMF’s resource envelope as temporary borrowing arrangements expire – at a time of potentially high liquidity needs in developing countries – which could threaten the IMF’s effectiveness and credibility.

“We call for a revised quota formula that further shifts quota shares from advanced countries to dynamic EMDEs (Emerging Markets and developing Economies) reflecting their growing weight in the global economy. The realignment of quota shares must protect the quota shares of all PRGT-eligible members and small developing states and should not be at the expense of other EMDEs. The 16th GRQ should deepen governance reforms to improve the voice and representation of EMDEs in the IMF’s Executive Board, including introducing a third Chair for Sub-Saharan Africa, but not at the expense of other EMDEs’ Chairs.”

The group said that the COVID-19 pandemic has imposed huge costs on members and that many impediments to the global recovery remain, with growth prospects increasingly divergent and uncertain.

It added that investing to spur recovery has been highly constrained by limited fiscal space and rising debt vulnerabilities and that rising inflationary pressures, driven by spikes in food, energy and commodity prices, pandemic and conflict-related disruptions in supply, international trade, and financial markets exacerbate output losses and inequality.

The group called for urgent global action to prevent hunger and food crises among vulnerable countries and poorer households and avert financial distress in highly indebted EMDEs.

According to the group, debt burdens in EMDEs have risen sharply in the past two years, driven largely by reduced fiscal revenues and increased public spending for pandemic response and that debt related risks need urgent attention to avert economic distress in highly indebted countries.

It said, “We welcome the improvements in debt transparency, with the support of the IMF and the WBG, especially in LICs. All actors, including private creditors, should work jointly to enhance debt transparency. We call for measures to ensure timely, orderly, and coordinated debt treatment under the G20 Common Framework, increase the participation of private creditors, and address the procyclical impact of sovereign credit ratings.

 Alleviating debt distress will require more development financing, particularly concessional financing