The board of governors of the International Monetary Fund (IMF) has approved a $650 billion allocation of IMF Special Drawing Rights, Report informs referring to Reuters.
IMF’s largest-ever distribution of monetary reserves will become effective Aug. 23.
IMF member countries will receive SDRs - the fund’s unit of exchange backed by dollars, euros, yen, sterling, and yuan - in proportion with their existing quota shareholdings in the fund. Monday’s approval by all 190 IMF member states was long expected.
“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,” IMF Managing Director Kristalina Georgieva said in a statement.
“It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” she said, adding that about $275 billion of the allocation will go to emerging markets and low-income countries.
Georgieva said the IMF would continue to actively engage with members to identify viable options for wealthy countries that receive SDRs to channel them to poorer countries that need them more. A key option is for wealthier nations to contribute SDRs to the IMF’s existing Poverty Reduction and Growth Trust for low-income countries, she said.
She added that the IMF was still considering a new trust for SDRs to facilitate sustainable growth in the medium term, indicating little change from discussions in July.