Yellen in sharp exchange with Republican senator over IMF plan to expand reserves

Treasury Secretary Janet Yellen had a sharp exchange Wednesday during a Senate hearing with Sen. John Kennedy, Republican of Louisiana, over a renewed plan by the International Monetary Fund to issue $650 billion in new reserves, known as Special Drawing Rights, to member states. IMF Managing Director Kristalina Georgieva on Tuesday said she would present the plan to the IMF’s executive board in June. The IMF first floated the plan last year as a way to help countries pay for the costs of battling the coronavirus. But it was blocked by the Trump administration and then-Treasury Secretary Steven Mnuchin. Republicans in Congress are unhappy the IMF plan has been resuscitated. They note that China, Russia and Venezuela will benefit from the new reserve allocation. Kennedy said the Biden administration was making an end-run around Congress and alleged the IMF plan would cost American taxpayers “$180 billion.” Yellen grew frustrated as the exchange went on. She said the U.S. would earn interest on its new SDRs so that the cost of the program would be a “wash.” “I don’t know where you got a number like that from.” Yellen said.

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