The Board of Governors of the International Monetary Fund (IMF) has approved a general allocation of Special Drawing Rights (SDRs) worth SDRs 456 billion ($650 billion) with the aim to boost global liquidity amid the ongoing COVID-19 crisis and help the recovery process in the IMF’s member countries.
The approved allocation is expected to go into effect on 23 August 2021, and it will be credited to the IMF’s member countries in proportion to their existing quotas in the fund.
About $275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries.
“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. 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 [who are] struggling to cope with the impact of the COVID-19 crisis,” said the IMF’s Managing Director Kristalina Georgieva.
Georgieva added that the IMF will also continue to engage actively with its members to identify viable options for voluntary channeling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and yield resilient and sustainable growth.
The IMF urged its members with strong external positions to voluntarily channel part of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT), adding that the concessional support through the PRGT is currently interest free.
It also noted that it is exploring other options to help poorer and more vulnerable countries in their recovery efforts.
Moreover, the IMF announced that it is considering establishing a new resilience and sustainability trust that could facilitate more resilient and sustainable growth over the medium term.
In its latest updated report on the global economic outlook, the IMF maintained its global GDP growth projections at 6 percent — the same projections announced in April’s report — before experiencing a slowdown to 4.9 percent.
However, the fund downgraded its predictions for GDP growth in emerging markets and developing countries to record 6.3 percent in 2021, before deaccelerating to 5.2 percent in 2022.
In its forecasts for Egypt’s economy — included in its reports on the completion of the stand-by arrangement (SBA) programme and the conclusion of the 2021 article consultations — the IMF expected the country’s GDP to grow by 5.2 percent in FY2021/22, up from 2.8 percent in FY2020/21, before rebounding slightly in FY2022/23 to reach 5.6 percent, which is the same percentage recorded in FY2019/20, which witnessed the onset of the pandemic in its fourth quarter.