UK pledges £50m to economic shock fund
Gordon Brown today pledged £50 million to a new international fund designed to act as a buffer for developing nations against economic disruption.
And the chancellor called on other developed nations to contribute to the fund, which was set up to minimise the impact of economic effects of fluctuating oil prices, conflict or natural disasters.
Announcing the deal following talks with his Saudi Arabian and French counterparts in Riyadh today, Mr Brown said the International Monetary Fund (IMF) had set up the fund in the wake of recent oil price increases and a spate of natural disasters.
“This new IMF facility will play a vital role supporting poverty reduction in some of the world’s most vulnerable countries, ensuring that development is not undermined by changes in economic conditions, whether those come [in] terms of trade shocks, high oil prices, or natural disasters,” he said.
“The UK’s $85 million contribution alone will enable $340 million in much-needed new finance for poor countries.”
He urged other developed nations, especially wealthy oil producers, to pledge their support for the new fund, suggesting that nations which have benefited from rising energy prices should help subsidise those nations which have lost out as a result.
“There is a pressing need for other donors to come forward with their share of the $750 million contribution needed to support this,” he added.
Saudi finance minister Ibrahim al-Assaf and French finance minister Thierry Breton have also pledged undisclosed amounts to the new fund.
Under the terms of the new facility, countries with annual per capita income of less than $895 will be granted minimal-interest loans by the IMF in the event of sudden economic disruption.
The IMF estimates that low-income countries will require as much as $3 billion in order to ward off economic shocks over the next five years.
