“The SDR allocation will provide additional liquidity to the global economic system – supplementing countries’ foreign exchange reserves" IMF Managing Director
By: Business Today Egypt
Thu, Aug. 26, 2021
Marking the largest allocation of funds in International Monetary Fund (IMF) history, the IMF’s Special Drawing Rights (SDRs), valued at $650 billion, went live on Monday.
“The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis,” said IMF Managing Director, Kristalina Georgieva.
Egypt’s share of the new SDRs allocation is expected to amount to $2.8 billion, writes news outlet Masrawy, citing unnamed banking sources.
“The SDR allocation will provide additional liquidity to the global economic system – supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt,” Georgieva added in an official statement.
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The allocation aims at adding on to countries’ foreign exchange reserves as well as cut their dependency on more expensive domestic or external debt.
“SDRs are being distributed to countries in proportion to their quota shares in the IMF. This means about US$275 billion is going to emerging and developing countries, of which low-income countries will receive about US$21 billion – equivalent to as much as 6% of GDP in some cases,” she explained.
The new SDR allocation is an important part of the IMF’s efforts towards supporting countries through the pandemic, which include US$117 billion in new financing for 85 countries and debt service relief for 29 low-income countries.
This allocation will help all IMF members (currently 190 members) to address the long-term global need for reserves and support a stable global economy, particularly the vulnerable countries struggling to adapt to the impacts of the pandemic.
IMF mission chief Celine Allard for Egypt recently stated that Egypt would no longer need external financing in the short term due to its successful reforms back in June 2021, after the country completed its final review for its 12-month Stand-By Arrangement (SBA) with the IMF.