IMF Executive Board Backs US$250 Billion SDR Allocation
to Boost Global Liquidity
Press Release No. 09/264
July 20, 2009
The Executive Board of the International Monetary Fund (IMF) has backed an
allocation of Special
Drawing Rights (SDRs) equivalent to US$250 billion to provide liquidity to
the global economic system by supplementing the Fund’s 186 member countries’
foreign exchange reserves. The equivalent of nearly US$100 billion of the new
allocation will go to emerging markets and developing countries, of which
low-income countries will receive over US$18 billion. The
will now be submitted to the IMF’s Board of Governors for final approval.
“The SDR allocation is a key part of the Fund’s response to the global
crisis, offering significant support to its members in these difficult times,”
IMF Managing Director Dominique Strauss-Kahn said.
The SDR allocation was requested as part of a
plan agreed at the
summit in London in April and endorsed by the International Monetary and
Financial Committee (IMFC) to tackle the global financial and economic crisis by
restoring credit, growth and jobs in the world economy. If approved by the Board
of Governors with an 85 percent majority of the total voting power in a vote
scheduled to close on August 7, the SDR allocation will be in effect on August
"The allocation is a prime example of a cooperative monetary response to the
global financial crisis," the Managing Director underscored.
SDR allocation will be made to IMF members that are participants in the
Drawing Rights Department (currently all members) in proportion to their
existing quotas in the Fund, which are based broadly on their relative size in
the global economy. The operation will increase each country’s allocation of
SDRs by approximately 74 percent of its quota, and Fund members’ total
allocation to an amount equivalent to about $283 billion, from about $33 billion
(SDR 21.4 billion).
SDRs allocated to members will count toward their reserve assets, acting as a
low cost liquidity buffer for low-income countries and emerging markets and
reducing the need for excessive self-insurance. Some members may choose to sell
part or all of their allocation to other members in exchange for hard
currency--for example, to meet balance of payments needs--while other members
may choose to buy more SDRs as a means of reallocating their reserves. In
supporting the allocation proposal, the Executive Board stressed that it should
not weaken the pursuit of prudent macroeconomic policies, and should not
substitute for a Fund-supported program or postpone needed policy adjustments.