The International Monetary Fund (IMF) board of governors has approved a US$650 billion Special Drawing Rights (SDR) general allocation for its member countries as a way of boosting global liquidity.

The general allocation of SDRs will become effective on August 23, 2021, and will benefit all our member countries and support the global recovery from the COVID-19 crisis.

IMF Managing Director Kristalina Georgieva said this allocation SDR will provide additional liquidity to the global economic system by supplementing the reserve assets of the Fund’s 190 member 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,” she said.

About US$275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries.

“We will also continue to engage actively with our membership to identify viable options for voluntary channelling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth”, Ms Georgieva said.

Ms Kristalina Georgieva made this SDR allocation formal proposal was made in June based on an assessment of IMF member countries’ long-term global reserve needs, and consistent with the Articles of Agreement and the IMF’s mandate.

One key option is for members that have 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).

The IMF is also exploring other options to help poorer and more vulnerable countries in their recovery efforts. A new Resilience and Sustainability Trust could be considered to facilitate more resilient and sustainable growth in the medium term.