Thanks to the developed countries, primarily the United States, as well as the largest banks such as the International Monetary Fund (IMF) and the World Bank, the global economy will continue to revive after the pandemic crisis. Investors have been extremely worried about a possible slowdown in the global economic recovery. So, the IMF stepped in.
The IMF board of governors approved this historic allocation, known as Special Drawing Rights (SDR), equivalent to $650 (SDR 456 billion) to boost global liquidity. "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," IMF Managing Director Kristalina Georgieva said. Notably, the newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.
About $275 billion of the allocated funds will go to emerging markets and developing nations, including low-income countries. The allocation of SDRs will become effective on August 23, 2021. "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," Kristalina Georgieva pointed out.
According to the IMF forecasts, many developed countries will be able to weather the pandemic crisis with minimal losses thanks to successful mass vaccination programs, as well as the opportunity to significantly increase government spending and loans to allocate funds to the most affected sectors of the economy.
