A new Special Drawing Right (SDR) allocation of US$650 billion to benefit all IMF member countries and support global recovery from the COVID 19 crisis is under discussion by IMF’s Executive Directors.
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), in a statement at the end of an informal discussion in Washington DC offices of the Fund, said she was encouraged by the initial discussions on a possible SDR allocation of US$650 billion.
She said by addressing the long-term global need for reserve assets, a new SDR allocation would benefit all member countries and support the global recovery from the COVID-19 crisis.
It would also be a powerful signal of the IMF membership’s determination to do everything possible to overcome the worst recession since the Great Depression, she noted.
Kristalina Georgieva said, the Executive Directors conveyed broad support among Fund members for IMF staff to formulate a proposal for a new SDR allocation equivalent to US$650 billion to provide additional liquidity to the global economic system by supplementing the reserve assets of the Fund’s 190 member countries.
She said, she intend to present by June, a formal proposal to the Executive Board to consider a new allocation of US$650 billion, based on an assessment of IMF member countries’ long-term global reserve needs, consistent with Articles of Agreement and the IMF’s mandate.
She said, the IMF will develop new measures to enhance transparency and accountability in the use of SDRs while preserving the reserve asset characteristic of the SDR. In parallel, staff would also explore options for members with strong financial positions to reallocate SDRs to support vulnerable and low-income countries, she added.
She said, If approved, the new allocation of SDRs would add a substantial, direct liquidity boost to countries, without adding to debt burdens.
It would also free up badly needed resources for member countries to help fight the pandemic, including to support vaccination programs and other urgent measures, Kristalina Georgieva said.
And it would complement the range of tools deployed by the IMF to support our membership in this time of crisis, she added
By Jojo Bruce-Quansah