(Bloomberg) — France will propose on a call of Group of 20 economy chiefs Tuesday that the International Monetary Fund increase its special drawing rights by $500 billion as part of an aggressive push to assist developing nations battered by the coronavirus crisis.
That would offer quick support to countries expected to face severe difficulties, particularly in Africa, French Finance Minister Bruno Le Maire said on a telephone conference with journalists. France will also propose a new rapid credit line to supplement swaps between central banks, and a doubling of emergency automatic drawing rights for developing countries.
“We need now to prepare a response to the economic crisis that could be extremely violent in developing countries,” Le Maire said. “We want massive and immediate aid.”
A debt moratorium could be a first step to help some countries, Le Maire said. “The major concern is to avoid the weakest states of the world being the primary victims of the coronavirus crisis,” he said.
On a call with G-20 leaders on Thursday, IMF Managing Director Kristalina Georgieva had said the world’s biggest economies should provide more support to keep the international monetary system from seizing up due to the pandemic. It sought backing to create a sizable quantity of reserve assets, or SDRs, as it did in the 2009 global financial crisis.
The move, which would require backing from the IMF’s membership, would immediately boost the liquidity of all IMF members once approved. The fund also asked for support to expand the use of swap-like instruments.
On Friday, JPMorgan Chase & Co. said that the IMF’s pandemic aid process should also ease some loan rules for developing nations to avoid saddling them with unsustainable debt.
Many of the 81 countries seeking IMF assistance will likely confront challenging financial markets and large fiscal deficits that may put them in a precarious debt position, JPMorgan analysts led by Nora Szentivanyi wrote. The IMF would have difficulty lending more than a fraction of its $1 trillion capacity without diluting its normal lending standards, they said.
(Updates with comments from Le Maire from third paragraph.)
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