MercoPress. South Atlantic News Agency

IMF chief addresses Biden proposing a “greener, smarter and fairer” global economy

IMF managing director Kristalina Georgieva sent “personal” letters to President-elect Biden and running mate Kamala Harris this week

The election of Joe Biden as US president gives the International Monetary Fund (IMF) a chance to reset its relationship with its largest shareholder and make green initiatives a bigger part of its global economic recovery plan.

IMF managing director Kristalina Georgieva sent “personal” letters to President-elect Biden and running mate Kamala Harris this week, an IMF spokesman revealed without providing any details about their contents.

President Trump has mounted legal challenges to the election results, thus far without evidence, but the IMF typically shies away from publicly commenting on elections until they are concluded.

Sources familiar with Ms Georgieva's thinking say president elect Joe Biden's commitment to multilateral institutions and his pledge to re-enter the Paris climate agreement should help the IMF advance its own goals.

One IMF source said that some member countries are hoping Biden will reconsider the Trump administration's opposition to new IMF resources, including a general allocation of new Special Drawing Rights that could boost members' currency reserves by hundreds of billions of dollars.

Treasury Secretary Steven Mnuchin has opposed such measures, which were last deployed during the 2009 financial crisis when Biden was Vice-President.

Mr Mnuchin has also opposed a new increase in the IMF's quota resources that could boost the shareholding of China and other big emerging market countries, a move also executed when Biden was last in office.

“On SDR allocation we certainly hope that it will be possible to return to the issue,” the source said, adding that past experience shows that a new quota agreement will be complicated no matter which party holds the White House.

In nearly every speech, Ms Georgieva also emphasises the need to target fiscal stimulus spending to build a “greener, smarter and fairer” global economy while cutting emissions and building more inclusive societies - goals widely shared by the Biden team, whose transition slogan is “Build Back Better.”

But the Trump administration has blocked inclusion of climate change in communiqués issued by the Group of 20 (G-20) major economies.

The IMF last month forecast the global economy would contract by 4.4% in 2020, returning to growth of 5.2% in 2021, with emerging markets other than China hit considerably harder.

Ms Georgieva has also run into resistance in her push for the G-20 to look beyond a debt freeze for the poorest countries to include heavily-indebted small island states and other countries hit hard by the pandemic and the collapse of tourism.

She will hammer home the need for public investment in a green economy during a meeting with global leaders at the Paris Peace Forum on Thursday, said another source familiar with the plans.

Due to appear in person with French President Emmanuel Macron, Ms Georgieva will be joined at the event by the leaders of Germany, India and China - but not US President Donald Trump.