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Big spending, danger lurking According to Reuters

© Reuters. FILE PHOTO: US Treasury Secretary Yellen attends an economic briefing at the White House in Washington

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) – US Treasury Secretary Janet Yellen on Thursday warned of the danger of a long-term divergence in the global economy following the COVID-19 crisis, at the same time calling on major economies to supply Grants substantial new financial support to ensure a strong recovery.

In a statement to the International Monetary Fund and World Bank steering committees, Yellen stressed the need for major economies to continue to support developing countries as they face a pandemic. COVID-19, climate change and a pile of debt burdens.

She urged the World Bank to help countries, especially the poorest countries in the world, have timely access to COVID-19 vaccine and support accelerated negotiations to supplement the Foundation of the Development Association. The World Bank’s international development for the poorest countries – the goal that the bank is aiming for by December.

Yellen said the United States has pledged $ 4 billion to the COVAX global vaccine delivery initiative, while also calling on other countries to join.

She signaled that Washington, which has so far only lent Mexico and Canada vaccines, could provide excess dosage to other countries in the future.

“The United States will continue to work with partners to increase vaccine supplies, find ways to share excess vaccine surpluses and ensure financing does not become an obstacle to global vaccination,” Yellen said.

Yellen’s comments reflect the Biden administration’s focus on strong international cooperation to tackle global challenges – a stark difference from the “go-it-alone” approach that the administration of former President Donald Trump chased.

“The crisis (COVID-19) has exacerbated the tendency to increase income inequality, raising concerns about a path of disparity within and between countries. We also face termites. “We can only solve these problems through strong international cooperation.” Yellen said in her remarks preparing for her first meeting with the IMF’s International Monetary and Finance Committee and the World Bank’s Development Committee.

The former head of the Federal Reserve said substantial monetary and financial support from major economies significantly improved the global economic outlook, but more effort is needed.

Yellen said Washington is working on a US $ 1.9 trillion COVID-19 bailout plan and is working on another major infrastructure package, while calling on other major economies to take action. the same, similar.

“The work hasn’t been done yet, the uncertainty is high and the risk of permanent scarring is left,” she said. “I urge major economies not only to avoid dropping support too soon, but also to try to provide a significant amount of new fiscal support to ensure a strong recovery.”

Developing countries should work with the IMF and the World Bank on economic policies and structural reforms, and seek official IMF funding programs, including the conditions, Yellen said. , if necessary. Some countries may need deeper debt handling, she added.

She urged all creditors to implement “full and transparent” the overall Group 20 debt settlement framework to avoid “unnecessary delays that could prolong the loan term and aggravate debt. growth shock. “

She also called on the World Bank to take the lead in “climate change investment” and continue to set an active climate and green recovery agenda after the crisis.

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