IMF reaffirms vital role in low-income countries

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The IMF continues to have a vital role to play in low-income countries, Managing Director Rodrigo de Rato said at the Center for Global Development. The Fund has moved swiftly to forgive the debt of 19 poor countries, and now, in the context of its Medium-Term Strategy, it will be helping low-income countries avoid a build-up of new debt and use increased aid to promote growth. It is also seeking fair representation of low-income countries in the IMF.

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IMF will continue to play vital role in low-income countries

The hard-won gains from debt relief may be lost if countries take on new debt to finance expenditures that do not spur growth, IMF Managing Director Rodrigo de Rato cautioned in a July 31 appearance at the Center for Global Development (CGD) in Washington, DC. In fact, he said, one of the tasks before the IMF is "to ensure that there is not another debt crisis." In outlining the Fund's strategy for lowincome countries, de Rato stressed that the IMF is "strongly committed to our low-income country members and to the international effort to reduce poverty." He highlighted the Fund's long advocacy of higher aid and its effective use, and the importance of protecting the voice and representation of poor countries in the IMF.

Joining him for a debate on the IMF's work in low-income countries were Kemal Dervis (Administrator, United Nations Development Program), Ricardo Hausmann (Director of Harvard University's Center for International Development), and Dennis de Tray (Vice President, CGD). CGD's Liliana Rojas- Suarez served as moderator.

The Fund is also strongly committed to making sure that countries have the ‘fiscal space' they need to expand social programs, especially in health and education.

-Rodrigo de Rato

IMF perspective

De Rato said that the IMF made an important contribution to reducing the debt of low-income countries when, under the Multilateral Debt Relief Initiative, it moved quickly to cancel the debts owed to it by 19 poor countries. But there are signs that new private and official lenders are rushing to provide new lending to these same countries. To help mitigate the risk of debt buildup, he said, the IMF and the World Bank have designed a forward-looking debt sustainability framework for low-income countries to assist them in their financing decisions. "We can also sound...