Treasury Secretary Janet Yellen asked Congress for billions to help foreign countries’ climate change and debt relief efforts.
In prepared remarks to the House of Representatives’ Subcommittee on State, Foreign Operations, and Related Programs, Yellen expressed concern that other economies are rebounding in a manner that disproportionately benefits the upper class.
Yellen told Congress on Thursday:
When I took office, one of my greatest concerns was a K-shaped recovery from the pandemic; a recovery where high-income households rebounded quickly — or even emerged better-off — while low- and middle-income families suffered for a very long time… Low-income nations haven’t had the fiscal space to implement sweeping relief, as we did with the American Rescue Plan. Even their ability to access vaccines is limited.
Suggesting that “America is better off in a wealthier, vaccinated world,” Yellen informed Congress that addressing “global security threats” — such as “climate change” — would be more difficult if most of the world is still dealing with the fallout from COVID-19.
“The United States must lead in addressing this global divergence,” she said. “The Treasury Department is prepared to be part of this leadership. We just need the resources.”
Yellen — who formerly helped to lead the federal government’s financial apparatus under the Clinton and Obama administrations — directed lawmakers’ attention to several portions of the Biden administration’s recent $6 trillion budget proposal.
Yellen asked that Congress fund its commitments to international financial institutions, which have mandates to help developing countries with their economic recoveries.
The first is funding for international financial institutions (or IFIs) like the World Bank and the African Development Bank… We have over $2.7 billion in unmet commitments to IFIs, and this will grow unless Congress appropriates funding to meet our current-year commitments and pay down our unmet balance.
Likewise, Yellen asked Congress to support new global entities meant to help developing nations struggling to meet foreign debt obligations.
The second involves low-income-country debt. The pandemic has wreaked havoc on the finances of these nations, and if they are going to rebuild, many will need to address their debt vulnerabilities. The United States led in creating the G20 Debt Service Suspension Initiative (or DSSI) and the Common Framework for Debt Treatments for precisely this reason, but now we need to fund both. Without new funding, the United States could be forced to delay the multilateral debt process under the Common Framework and charge much higher interest rates on DSSI debt service suspensions.
Yellen then asked for additional dollars to help the International Monetary Fund issue new loans to recovering low-income nations.
Third, our budget includes funding for the IMF’s Poverty Reduction and Growth Trust — and authorization to lend Special Drawing Rights to it or another appropriate fund. This would be America’s first direct contribution to the Trust, and it will also help establish a trust fund that would support the recovery of low- and middle-income countries, as well as broader economic reforms that would improve the lives of their people. We’re working with the IMF and other international partners on this.
Yellen also requested $1 billion to help developing countries fight climate change.
Fourth, on the other side of the pandemic, we have to help low-income nations grapple with the reality of climate change — because that’s the only way we’ll reach net-zero emissions, as a global community. Treasury’s request includes roughly $1 billion for this purpose.
During the 2020 election cycle, the Biden-Harris campaign platform expressed a desire to lead the world in addressing “the most urgent global challenges.”
“The Biden administration will rejoin the Paris Climate Accord on day one and lead a major diplomatic push to raise the ambitions of countries’ climate targets,” reads the platform, which also commits the United States to “convene a climate world summit to directly engage the leaders of the major carbon-emitting nations of the world to persuade them to join the United States in making more ambitious national pledges, above and beyond the commitments they have already made.”
President Biden does not share former President Trump’s distrust of global initiatives like the World Health Organization — which the Trump administration exited last July amid reports that the group helped Chinese government officials conceal the origins of COVID-19.
On his first day in the White House, President Biden announced his intention to rejoin the entity. Dr. Anthony Fauci affirmed that the United States would also “fulfill its financial obligations to the organization.”