Introduction section G20 countries to channel USD 45 billion to vulnerable countries: 4 billion from Italy
G20 countries to channel USD 45 billion to vulnerable countries: 4 billion from Italy
Italy will contribute with USD 4 billion to the recent announced USD 45 billion of Special Drawing Rights (SDRs) that G20 countries have pledged to allocate to the most vulnerable economies.
Italy’s commitment constitutes 20% of its SDR quota, and includes a contribution of USD 1 billion SDRs (approximately USD 1.4 billion) to the Poverty Reduction and Growth Trust (PRGT) of the International Monetary Fund (IMF), with a view to increase its lending capacity in providing subsidized financing to the poorest countries.
This G20 initiative is part of the broader and ambitious goal, defined at global level, of addressing USD 100 billion in voluntary contributions to vulnerable countries. This follows the new SDR general allocation - USD 650 billion, the largest in its history - implemented by the IMF and backed by the G20 in August 2021. A line of funding that will help address global long-term reserve needs, in support of policies of response to the pandemic crisis.
While the new general allocation makes USD 275 billion available to emerging and developing countries, on 13 October 2021 in their meeting in Washington, G20 Finance Ministers and Central Banks Governors hailed with favour the progress made by the IMF for identifying concrete options to allocate, on a voluntary basis, a share of SDRs. In particular, additional funds should strengthen the lending capacity of the PRGT and establish a new Resilience and Sustainability Trust at the IMF, with the aim of providing resources at affordable conditions and reduce macroeconomic risks, such as those resulting from pandemics and climate change.
The G20 package of initiatives crafted to support the most vulnerable countries coping with the pandemic also includes the G20 Debt Service Suspension Initiative (DSSI), which is estimated to have ensured at least USD 12.7 billion in suspension of debt service between May 2020 and December 2021, benefiting 50 countries; the Common Framework for Debt Treatment Beyond the DSSI, to systematically address debt-related vulnerabilities with a case-by-case approach; the Review of the Multilateral Development Banks (MDBs) Capital Adequacy Framework, which was recently launched and which will help make the impact of the financial resources of the MDBs more effective.