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The International Monetary Fund has agreed to increase the finances of low- and middle-income countries to support their development Pandemic Responded by allocating special drawing rights of US$650 billion.

Allocation is a foreign exchange reserve asset, equivalent to a newly minted currency, which will be distributed to the 190 member countries of the IMF roughly in proportion to its share among the 190 member countries. Global economyApproximately US$275 billion of allocations will be used for emerging and developing countries, and the rest will be used for the world’s largest economy.

IMF president Kristalina Georgieva (Kristalina Georgieva) said in a statement on Monday: “This is a historic decision-this is the largest allocation of special drawing rights in the history of the IMF. It is also a boost to the global economy in an unprecedented period of crisis.”

“The allocation of special drawing rights will benefit all members, meet the long-term global demand for reserves, build confidence, and promote the resilience and stability of the global economy. It will especially help our most vulnerable countries in their efforts to cope with the impact of the Covid-19 crisis. .”

US$275 billion

Allocate new special drawing rights for emerging and developing countries

The announcement comes at a critical juncture in developing economies, as the number of Covid-19 cases and deaths rises with the spread of the more contagious variant of Delta, their recovery is faltering.The International Monetary Fund recently listed limited access to vaccines as a major disadvantage reduce It raised its 2021 growth forecast for the group of countries by 0.4 percentage points to 6.3%.

Special drawing rights are provided without the usual additional conditions International Monetary Fund Loans do not have to be repaid, allowing the government to use them at will without the need to take compensation measures to support public finances.

In last month’s funding proposal, Georgieva pointed out that more than half of the Emerging and developing countries Entering a pandemic due to insufficient reserves, many people are forced to further deplete their reserves in response to the crisis.

She said that the central banks of advanced economies have injected trillions of dollars into the financial system, which has made it easier to obtain global capital flows, but this can no longer be counted on because policymakers are considering withdrawing their support.

Many observers have called on rich countries to donate special drawing rights to poorer countries that need it more. On Monday, Georgieva said that the International Monetary Fund will seek to advance these efforts.

She said: “We will also continue to actively engage with our members to determine viable options for transferring SDRs from richer member states to poorer and more vulnerable member states to support its pandemic recovery. And achieve resilient and sustainable growth.”

Some countries, including Japan, France, the United Kingdom, and Italy, provided special drawing rights to the International Monetary Fund’s Poverty Reduction and Growth Trust Fund, which provided emergency funds to several poor countries during the pandemic. However, most of the PRGT’s funds are conditional and must be repaid, which makes it less advantageous to recipients.

The 190 member states of the IMF voted for the new allocation after obtaining the approval of the organization’s executive board in early July. The U.S. has enough votes due to the size of its economy to unilaterally veto it, blocking the distribution when former President Donald Trump first proposed it in 2019, but the Joe Biden administration quickly expressed support for the January office when he acted .

The distribution will take place on August 23.