The Board of Governors of the International Monetary Fund (IMF) on Monday, August 2, 2021, approved the allocation of $650 billion in reserve funds through IMF Special Drawing Rights to crumble down the impact of covid-19 from the world by boosting the vaccination drive across the globe, especially among the poorer countries.
“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” said, International Monetary Fund (IMF) Managing Director Kristalina Georgieva.
The recent allocation of funds is the largest increase in currency reserves in IMF’s 75 years of existence which would be effective from August 23, 2021, to foster vaccine production and to help countries deal with mounting debt and ultimately fallout from the Covid-19 pandemic.
Member countries of IMF will receive the fund’s unit of exchange backed by dollars, yen, euros, sterling and yuan, in the proportion of their existing quota shareholdings in the fund.
Around 70% of the allocation will be given to the G-20 (largest economies), with 3% for low-income nations. Overall, 58% of the new SDRs will be distributed to advanced economies, with 42% for developing and emerging economies. So out of $650 billion, about $21 billion will be credited to low-income countries and $212 billion to other emerging markets and developing countries, without counting China, according to U.S. Treasury Department calculations.