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Monday, January 30, 2023
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HomeNationalIMF divided over Pakistan and other nations' surcharges

IMF divided over Pakistan and other nations’ surcharges

Pakistan, other countries are pushing to eliminate or at least temporarily reduce surcharges

The executive board of the International Monetary Fund (IMF) has discussed the surcharges that were being levied on bigger loans paid by middle-income and lower-income nations that were not repaid, however, the board did not agree to begin a formal review.

Pakistan, Argentina and other countries have been pressuring the IMF to eliminate or at least temporarily reduce the surcharges which would cost affected borrowers $4 billion from the start of the Covid-19 outbreak through the end of 2022 in addition to interest payments and penalties, according to the IMF estimates.

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The fund should not alter its funding mechanism at a time when the global economy was experiencing substantial headwinds, according to the United States, Germany, Switzerland and other advanced nations. These countries were opposed to the shift.

According to a representative for the IMF the board addressed possible revisions to the policy during its routine assessment of the precautionary balances held by the international lender but it was unable to come to a decision.

The spokeswoman also said that opinions on the surcharge policy generally continued to differ particularly on the merits of a temporary remission of fees.

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No specifics were given but the fund has stated that it will issue a press statement and staff paper in the upcoming days that would give a more thorough explanation of the board’s discussions.

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