The International Monetary Fund executive board announced that its board of governors had approved a $650 billion allocation of IMF Special Drawing Rights. The fund's largest-ever distribution is aimed at combating an unprecedented crisis caused by the coronavirus pandemic.
“The largest allocation of Special Drawing Rights in history - about US$650 billion - comes into effect today. The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis,” Kristalina Georgieva, Managing Director of the fund, said.
According to the IMF, the decision on how to use this “precious resource” rests with the member countries. At the same time, Georgieva calls on developed economies to voluntarily channel part of their SDRs to states most in need. Some countries have already pledged to lend $24 billion, which is a pretty good start. The organization is also considering the establishment of a new trust which could use channeled SDRs to help the most vulnerable members.
“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,” Georgieva added.
