Washington (UNA-OIC) – The largest Special Drawing Rights (SDRs) allocation in history – US$650 billion – came into effect on August 23, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva announced on Monday.
The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat the unprecedented crisis caused by the COVID-19 pandemic, Ms. Georgieva said in a statement.
“The SDR allocation will provide additional liquidity to the global economic system – supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt. Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the crisis,” she noted.
SDRs are being distributed to countries in proportion to their quota shares in the IMF. This means about US$275 billion is going to emerging and developing countries, of which low-income countries will receive about US$21 billion – equivalent to as much as 6 percent of GDP in some cases.
“This SDR allocation is a critical component of the IMF’s broader effort to support countries through the pandemic, which includes: US$117 billion in new financing for 85 countries; debt service relief for 29 low-income countries; and policy advice and capacity development support to over 175 countries to help secure a strong and more sustainable recovery,” the IMF chief said.