COVID-19: Role of the International Financial Institutions

Summary

The international financial institutions (IFIs), including the International Monetary Fund (IMF), the World Bank, and regional and specialized multilateral development banks, are mobilizing unprecedented levels of financial resources to support countries responding to the health and economic consequences of the COVID-19 pandemic.

More than half of the IMF’s membership has requested IMF support, and the IMF has announced it is ready to tap its total lending capacity, about $1 trillion, to support governments responding to COVID-19.

The World Bank has committed to mobilizing $160 billion over the next 15 months, and other multilateral development banks have committed to providing $80 billion during that time period.

At the urging of the IMF and the World Bank, the G-20 countries in coordination with private creditors have agreed to suspend debt payments for low-income countries through the end of 2020.

Policymakers are discussing a number of policy actions to further bolster the IFI response to the COVID-19 pandemic. Examples include changing IFI policies to allow more flexibility in providing financial assistance, pursuing policies at the IMF to increase member states’ foreign reserves, and providing debt relief to low-income countries.

Congressional Role

Congress exercises oversight of U.S. participation of the IFIs and authorizes and appropriates U.S. financial contributions to the IFIs.

In response to the overwhelming demand for IFI resources, in March 2020 Congress accelerated authorizations that were under consideration in the FY2021 budget request to increase funding for the IMF, two World Bank lending facilities, and two African Development Bank lending facilities (P.L. 116-136).

Some of the policy actions under discussion to bolster the IFI response to the COVID-19 pandemic, such as IMF gold sales, IMF policies to bolster foreign reserves, and additional debt relief for low-income countries, would require congressional legislation.

Some Members of Congress may seek to shape or exercise broader oversight of U.S. policy towards IFI policy changes as well as new IFI programs that could exceed $1 trillion.