Member nations approved the biggest resource injection in the International Monetary Fund’s history, with $650 billion meant to help countries deal with mounting debt and the fallout from the Covid-19 pandemic.
The creation of the reserve assets -- known as special drawing rights -- is the first since the $250 billion issued just after the global financial crisis in 2009, with Managing Director Kristalina Georgieva billing it as “a shot in the arm for the world” that will help boost global economic stability. The SDR allocation will be effective on Aug. 23, the IMF said in a statement Monday.
“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,” Georgieva said. “It will particularly help our most vulnerable countries struggling to cope with the impact of the Covid-19 crisis.”
The U.S.’s position changed under President Joe Biden and Mnuchin’s successor, Janet Yellen, and with the fund exploring options for members with strong financial positions to reallocate the reserves to support vulnerable and low-income countries.
Still, a global allocation of $650 billion was about the maximum that the U.S. could support without needing to get approval from Congress.
Reserves are allocated to all 190 members of the IMF in proportion to their quota, and some 70% will go to the Group of 20 largest economies, with just 3% for low-income nations. Overall, 58% of the new SDRs go to advanced economies, with 42% for emerging and developing economies.
So of the $650 billion, about $21 billion go to low-income countries and $212 billion to other emerging market and developing countries, without counting China, according to U.S. Treasury Department calculations.
- https://www.imf.org/en/News/Articles/2021/07/30/pr21235-imf-governors-approve-a-historic-us-650-billion-sdr-allocation-of-special-drawing-rights
