IMF $650 billion reserves distribution clears last hurdle, takes effect on Aug 23

Reuters reports that the International Monetary Fund said 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 in proportion with their existing quota shareholdings in the fund. 

“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.

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.