(Bloomberg) --

France said the U.S. is opposing an attempt by the International Monetary Fund to increase its capacity to help countries in financial trouble because of the coronavirus.

The IMF has asked Group of 20 leaders to support creating more of the reserve assets known as special drawing rights, or SDRs, as it did to the tune of $250 billion in the global financial crisis. France says around twice as much should be created now, but that would require 85% of IMF votes, where the U.S. is the biggest shareholder.

French Finance Minister Bruno Le Maire said the idea is proving “difficult” with the U.S., and he’s spoken to Treasury Secretary Steven Mnuchin about it twice already.

“The U.S. response for now is negative,” Le Maire told reporters on Tuesday ahead of virtual meetings of IMF and World Bank this week. “But we continue to think it is a response that is not costly for IMF members and very effective for developing countries.”

While the U.S. isn’t convinced and agreement is unlikely tomorrow, France will keep pushing because the measure is more monetary than fiscal so would be less costly for budgets, according to a finance ministry official, who declined to be identified in line with government policy.

Many countries support an expansion of SDR, including Germany which is usually cautious about such a move, the French official added.

Debt Moratorium

Le Maire also said countries working within the Paris Club framework have agreed on a moratorium on debt payments for 76 of the poorest countries that are eligible for aid from the International Development Association of the World Bank. For the first time, the Paris Club agreement includes China and other Group of 20 countries.

The agreement covers $12 billion in bilateral government loans and $8 billion in debts to private creditors. There are another $12 billion of debt payments to multilateral organizations due in 2020 that could be added to the moratorium, Le Maire said.

Le Maire said the moratorium is a significant first step, particularly the involvement of China. Any cancellations for countries with debt sustainability problems will have to be considered at the end of the year in multilateral framework, he added.

Money Creation

IMF Managing Director Kristalina Georgieva has reiterated her institution’s willingness to use its $1 trillion lending power, but has also warned that she may need governments to bolster its resources if the crisis continue for longer than expected or if there’s a second wave of the disease.

More SDRs could help ensure emerging markets avoid a cash crunch as they deal with the health crisis, economic stagnation and capital outflows. The IMF’s executive board on Monday approved debt service relief for 25 countries for six months via its Catastrophe Containment and Relief Trust.

In a recent report, Mark Sobel, the U.S.’s former Executive Director at the IMF, has said there are “better and more effective solutions” for the IMF to embrace than seeking more SDRs, such as offering short-term loans of dollars.

“Some major members remain unconvinced for now, but ultimately concerns about the negative effects of money creation at the IMF would be the same as on the national level where central banks have been rapidly expanding money supply,” Bank of America Corp. analysts said in a report on Tuesday. “In a world of massive demand shortage and deleveraging, inflation seems a rather unlikely concern.”

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