In a new report, we rely on public reporting from multilateral development institutions and funds to provide a clearer picture of China’s participation across the multilateral development system. We find that China has staked out a uniquely important position, one that relies on leading roles as a shareholder, donor, client, and commercial partner. No other country wears so many hats so effectively across these global institutions.
CGD Policy Blogs
With the allocation of $650 billion of IMF special drawing rights (SDRs), the global economy has, in the words of the IMF’s Managing Director, been given a financial shot in the arm. One question that naturally follows is whether the injection has done any good?
In a study of 131 IMF programs, I found that IMF conditionality in general helped to shield education and health spending from budget cuts in the short term, particularly during budget negotiations, but it did not succeed in significantly raising spending in relation to GDP over time. In this light, I argue that the focus of IMF conditionality needs to change to also achieve long-term increases in education and health spending.
As governments worldwide explore options to increase liquidity and insulate against the worst consequences of COVID-19, Special Drawing Rights (SDRs) are one means of achieving both goals. In August, the IMF announced the largest allocation of SDRs in history—$650 billion—as a critical step to support countries through the pandemic and promote a sustainable recovery.
With the recent allocation of special drawing rights (SDRs)—a reserve asset issued by the IMF—to help countries weather the economic effects of the pandemic, the international discussion has shifted to ways to rechannel a portion of the SDRs that were allocated to high-income economies. The focus has been on the IMF itself as the channel for getting these resources from advanced countries to vulnerable low- and middle-income countries.
Anyone who follows the media on development finance will not be surprised if the corridor talk at the upcoming Annual Meetings of the World Bank and International Monetary Fund (IMF) is affected by the recent World Bank decision to discontinue the Doing Business Index. These discussions will invariably include the implications for data management and integrity at the Bank as well as spillovers questions regarding the leadership at both institutions.
CGD's Mark Plant and University of Oxford's Adrienne Cheasty, formerly of the IMF, discuss how SDRs work, what the IMF's new allocation means, and what needs to happen to ensure its effectiveness.
A new allocation of Special Drawing Rights (SDRs) amounting to some $650 billion is now expected the end of August. This allocation of an IMF reserve asset, intended to help countries weather the economic crisis created by COVID-19, will be more than 2½ times the size of the last allocation and substantially boost countries’ gross international reserves. For many low- and middle-income countries (LMICs) these added reserves will provide policymakers much needed room for maneuver as they continue to struggle with huge economic impact of the global pandemic and its aftermath.
Climate change poses extraordinary threats to macroeconomic stability and global prosperity, and since the IMF’s purpose is to foster both objectives, its help in addressing these threats is central to its mandate. While the IMF is focusing on how to adapt its policy advice, a strong case can be made too for launching a new lending instrument: a Green Transition Facility.
Expanding Vaccine Access and Humanitarian Financing Should Be Urgent Objectives for the World Bank and IMF
Shortly before the Spring Meetings of the World Bank and the International Monetary Fund, we set out how they could be a turning point in addressing the consequences of the pandemic.