IMF set to finalize plans for $ 650bn increase in reserves by August
The International Monetary Fund expects to finalize plans to complete the allocation of the $ 650 billion Special Drawing Rights, the largest issuance in its history, by the end of August.
The move will strengthen Washington-based reserves after it disbursed more than $ 109bn in emergency loans and debt relief to countries struggling to cope with Covid’s economic, social and healthcare challenges. -19.
“Today the IMF executive board discussed a proposal for a new $ 650bn SDR allocation- the largest release in IMF history aimed at helping its membership, especially the most vulnerable, overcome the Covid crisis- 19, ”IMF spokesman Gerry Rice said following the board meeting on Friday.
“The board discussion is another step in the process toward a new SDR allocation, which we expect to be completed by the end of August.”
An increase in Special Drawing Rights is one of several measures the Washington -based fund called for at its joint meetings with the World Bank in April of this year.
Special Drawing Rights are an international reserve asset created by the IMF in the late 1960s. They are based on a basket of five global currencies-the US dollar, the euro, the renminbi. of the Chinese, the Japanese yen and the British pound.
The pandemic ended the global economy in its worst recession since the Great Depression last year, with world output shrinking by 3.3 percent. However, a rapid launch of the vaccine by countries around the world and the injection of approximately $ 16 trillion of fiscal stimulus and $ 9tn of monetary support by governments and central banks has helped the global economy. to get back. It is estimated to expand by 6 percent this year, according to the fund.
The IMF’s response to the pandemic focused on providing emergency financing and debt relief to the world’s poorest countries, as well as campaigning for international governments to agree on debt relief agreements. .
Earlier this month, the IMF and the World Bank set up a high-level advisory group of economists, development finance experts and academics to think of strategies for a sustainable recovery from in the pandemic.
“The world is faced with two major crises – the pandemic and the climate emergency – that demand radical and co -ordinated action,” Kristalina Georgieva, the IMF’s managing director, said.
“Through policy analysis and practical measures, the high -level advisory team has a role to play in this effort.”
The IMF is also investigating creating a trust that could allow its members to lend reserve funds to more countries, including middle -income countries vulnerable to climate change.
The Group of Seven high -income countries has already provided “green light” funding to work on the plan, Ms Georgieva said after the conclusion of the G7 summit in England, earlier this month.
The fund plans to work with its members in the coming months on how they can allocate some of their special drawing rights, or use budget loans to reach – or even exceed – the goal of distributing $ 100bn in some of the most vulnerable countries.