WASHINGTON, Aug 2 (Reuters) - The International Monetary
Fund said on Monday its board of governors approved a $650
billion allocation of IMF Special Drawing Rights and said its
largest-ever distribution of monetary reserves would become
effective Aug. 23.
IMF member countries will receive SDRs -- the fund's unit of
exchange backed by dollars, euros, yen, sterling and yuan -- in
proportion with their existing quota shareholdings in the fund.
Monday's approval by all 190 IMF member states was long
expected.
"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," IMF
Managing Director Kristalina Georgieva said in a statement.
"It will particularly help our most vulnerable countries
struggling to cope with the impact of the COVID-19 crisis,” she
said, adding that about $275 billion of the allocation will go
to emerging market and low-income countries.
Georgieva said the IMF will continue to actively engage with
members to identify viable options for rich countries that
receive SDRs to channel them to poorer countries that need them
more. A key option is for wealthier countries to contribute SDRs
to the IMF's existing Poverty Reduction and Growth Trust for
low-income countries, she said.
She added that the IMF was still considering a new trust for
SDRs to facilitate sustainable growth in the medium term,
indicating little change from discussions in July.
The IMF's last SDR distribution came in 2009 when member
countries received $250 billion in SDR reserves to help ease a
global financial crisis.
To spend their SDRs, countries would first have to exchange
them for underlying hard currencies, requiring them to find a
willing exchange partner country.
(Reporting by David Lawder; Editing by Leslie Adler)