The Board of Governors of the International Monetary Fund on Monday approved a general allocation of Special Drawing Rights equivalent to $650bn to boost global liquidity in nations like Nigeria and others.
The amount is the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis
IMF Managing Director Kristalina Georgieva who confirmed this in a statement said the SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy
“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis.
“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy.
“It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” Georgieva said.
The statement said the general allocation of SDRs will become effective on August 23, 2021.
It said the newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.
About $275bn of the new allocation will go to emerging markets and developing countries, including low-income countries.
“We will also continue to engage actively with our membership to identify viable options for voluntary channeling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth”, Georgieva said.
She said one key option is for members that have strong external positions to voluntarily channel part of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT).
She added that concessional support through the PRGT is currently interest free.
She noted that the IMF is also exploring other options to help poorer and more vulnerable countries in their recovery efforts.
It said a new Resilience and Sustainability Trust could be considered to facilitate more resilient and sustainable growth in the medium term.