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2 Minutes Read FILE PHOTO: Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), speaks during the IMF and World Bank’s 2019 Annual Fall Meetings of Finance Ministers and Bank Governors in Washington, D.C., on October 17, 2019. REUTERS/File Photo/Mike Theiler (Reuters) – VENICE, Italy (Reuters) – The International Monetary Fund’s executive board approved a $650 billion allocation of IMF Special Drawing Rights on Friday, bringing the distribution of currency reserves to the IMF’s 190 member countries closer to its August deadline. Kristalina Georgieva, the IMF’s Managing Director, said she will now present the SDR allocation plan to the Fund’s Board of Governors, which includes members from every IMF member country. In a statement made ahead of a G20 finance ministers and central bank governors meeting in Venice, Georgieva said, “This is a shot in the arm for the world.” “The SDR distribution will increase liquidity and reserves in all of our member countries, create trust, and strengthen the global economy’s resilience and stability.” To help ease a global financial crisis, the IMF released $250 billion in SDR reserves to member nations in 2009. The SDR is the International Monetary Fund’s unit of exchange, consisting of a basket of currencies including dollars, euros, yen, pounds, and yuan. Countries would have to exchange their SDRs for underlying hard currencies before spending them, which would necessitate finding a willing exchange partner country. According to Georgieva, the additional SDR allocation, which was first backed by the G20 big economies in April, will benefit every IMF member country and will especially help vulnerable countries enhance their response to the COVID-19 issue. In the coming months, she added, the Fund would work with member countries to “find realistic possibilities for voluntary channeling of SDRs from wealthier members to support our poorer and more vulnerable countries.” Over the next two days, G20 finance officials are anticipated to explore potential SDR contribution methods for low-income nations, vulnerable middle-income countries, and tiny island states. David Lawder contributed reporting, and Richard Pullin edited the piece./nRead More

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