The largest in the IMF’s history, it comes into effect, in
an effort to help countries recover from the COVID-19 pandemic.
“The allocation is a significant shot in the arm for the
world and, if used wisely, a unique opportunity to combat this unprecedented
crisis.
“The SDR allocation will provide additional liquidity to the
global economic system supplementing countries’ foreign exchange reserves,’’
IMF Managing Director Kristalina Georgieva said in a statement.
He added that countries could use the space provided by the
SDR allocation to support their economies and step up their fight against the
crisis.
SDRs were being distributed to countries in proportion to
their quota shares in the IMF.
About 275 billion dollars of the new allocation would go to
emerging and developing countries, of which low-income countries would receive
about 21 billion dollars, according to the IMF.
The announcement came weeks after the board of governors of
the IMF on Aug. 2 finally approved the SDR allocation proposal, which was
delayed for more than a year.
The United States, the IMF’s biggest shareholder with a
unique veto power, blocked the proposal last year under the Donald Trump administration.
The Joe Biden administration quickly reversed the position
and voiced its support for the plan earlier this year.
The SDR allocation proposal gained wide support during the
virtual spring meetings of the IMF and the World Bank held in April, as G20
finance ministers and central bank governors, as well as officials from other
IMF members, backed the plan.
The SDR, an international reserve asset created by the IMF
in 1969 to supplement its member countries’ official reserves, can be exchanged
among governments for freely usable currencies in times of need.