The fund, which for decades has backstopped countries in financial distress, imposes these fees for loans that are unusually large or long-standing and were designed to help protect against hefty losses from high-risk lending
IMF primarily serves as a lender of last resort, although recently it has expanded its mission to include reducing extreme inequality and combating climate change. (Image: Stefani Reynolds / AFP)
At a time when the coronavirus pandemic is fueling a rapid rise in inequality and debt, a growing number of policymakers and economists are pressuring the International Monetary Fund to eliminate extra fees it charges on loans to struggling nations because they siphon away scarce funds that could instead be used to battle COVID.
The fund, which for decades has backstopped countries in financial distress, imposes these fees for loans that are unusually large or long-standing. They were designed to help protect against hefty losses from high-risk lending.
But critics argue that the surcharges come at the worst possible moment, when countries are already in desperate need of funds to provide poverty aid and public health services. Some of the countries paying the fees, including Egypt, Ukraine and Armenia, have vaccinated only about one-third of their populations. The result, the critics argue, is that the IMF ends up undermining the financial welfare and stability of the very places it is trying to aid.
In the latest critique, a letter this week to Treasury Secretary Janet Yellen from 18 Democrats in Congress, including Reps. Alexandria Ocasio-Cortez of New York and Pramila Jayapal of Washington, asked the United States to support ending the surcharge policy.
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