Gallagher Co-Authors FT OpEd on COVID-19 and IMF

Kevin GallagherProfessor of Global Development Policy at the Frederick S. Pardee School of Global Studies and Director of the Global Development Policy (GDP) Center, along with colleagues José Ocampo (director of the Economic and Political Development Concentration at Columbia University) and Dr Ulrich Volz (reader in Economics at University of London) published an OpEd in The Financial Times (March 20, 2020), arguing that the International Monetary Fund (IMF) should use its Special Drawing Rights (SDRs) to boost inter-sovereign liquidity during the coronavirus crisis.

Titled, “Its time for a major issuance of the IMF’s Special Drawing Rights,” the OpEd calls for an emergency meeting of the IMF as soon as possible for the rapid issuance of at least $500bn in international liquidity, in the form of additional Special Drawing Rights (SDRs). 

More from the OpEd:

In many countries, sovereign debt repayments will be due soon, and it will be difficult, if not impossible, to raise new funds in current market conditions. It will be even more difficult for private entities in developing and emerging markets to roll over foreign currency-denominated debt in international capital markets, raising fears of large-scale financial distress, which could in turn worsen sovereign risk profiles. Problems may be compounded by a drop in commodity prices, which for many economies are a major source of foreign currency. In short, the coronavirus crisis has the potential to trigger a large-scale financial crisis across the developing world.

… International liquidity support is urgently needed. Global financial leaders should meet virtually as soon as possible to agree to swiftly put new international liquidity into the global market place. Building on the enlightened decision made by the G20 at their London meeting in April 2009 to issue Special Drawing Rights (SDRs) equivalent to $250bn, which was then quickly implemented, we suggest that the IMF issues new SDRs to the amount of at least $500bn.

The full piece may be read here.

Kevin Gallagher is a professor of global development policy at Boston University’s Frederick S. Pardee School of Global Studies, where he directs the Global Development Policy Center. He is author or co-author of six books, including most recently, The China Triangle: Latin America’s China Boom and the Fate of the Washington Consensus. Read more here.