International Monetary Fund (IMF) Managing Director Kristalina Georgieva has said she is “confident” that the IMF will distribute a new allocation of Special Drawing Rights (SDR) to member countries by mid-August.
Georgieva expressed confidence in an exclusive interview with Xinhua.
“It is a remarkable demonstration of multilateralism” that the IMF membership has agreed to support a new SDR allocation of 650 billion U.S. dollars, the largest in the history of the IMF,” she said.
“In comparison, in the midst of the global financial crisis, the membership allocated 250 billion dollars to help countries deal with the consequences of this crisis,” she said.
Georgieva said she has committed by the end of June to make a proposal on the new SDR allocation to the IMF board of directors. Once the proposal is approved, it will be submitted to the IMF board of governors for a final vote.
“Given that we all are under pressure to act for the exit from the crisis, I am confident that sometime in summer, by mid-August, the new allocation will be distributed to our membership,” she said.
Georgieva said the upcoming SDR allocation is “significant” as it will provide much-needed reserves boost to emerging markets and developing countries, especially low-income countries, whose reserves have been severely depleted in response to the pandemic.
Meanwhile, “it sends a powerful signal that we are in this together and building confidence for the exit from the crisis,” she said.
By strengthening their reserves, countries are in a better position to allocate fiscal space to fight the pandemic, vaccinate their people and support vulnerable parts of the population, according to Georgieva.
Georgieva also said the IMF sees the “clear value” of SDR as an international reserve asset, as it is serving the membership well and it complements reserves that are accumulated in countries.
“That complement from the SDR is very valuable because it is a basket of currencies, in other words, less affected by exchange rate fluctuations,” she said.
The SDR can be exchanged among governments for freely usable currencies in times of need.
The Chinese currency, renminbi, formally became the fifth currency in the SDR basket on Oct. 1, 2016, joining the U.S. dollar, the euro, the Japanese yen, and the British pound.