The UN president applauded the International Monetary Fund’s (IMF) decision to authorize a $650 billion allotment of Special Drawing Rights to “boost liquidity” as the COVID-19 situation continues to intensify limitations on government expenditure around the world.
Secretary-General António Guterres delivered a statement on the shift in policy toward Special Drawing Rights, or SDRs, a sort of foreign reserve asset designated and maintained by the International Monetary Fund, as a source of additional cash to assist pay down debts.
He also stated that economies that do not require cash should consider diverting these resources to vulnerable low- and middle-income countries that require a liquidity injection by replenishing the IMF’s Poverty Reduction and Growth Trust Fund.
The IMF made extra borrowing accessible to its 190 member countries on Monday, approximately in proportion to their share of the global economy.
IMF Managing Director Kristalina Georgieva said, “This is a historic decision – the largest SDR allocation in the IMF’s history and a shot in the arm for the global economy at a time of unprecedented crisis”. The SDR allocation will benefit all members by addressing the long-term global need for reserves, fostering confidence, and enhancing the global economy’s resilience and stability. It will be especially beneficial to our most vulnerable countries, which are having to cope with the COVID-19 situation.
The Secretary-General also emphasized the importance of quickly establishing the proposed Resilience and Sustainability Trust at the IMF…[for] a comprehensive response and recovery, including more support for vaccinations and debt management, as well as to support developing economies in restructuring for inclusive growth.
He encouraged the world’s top economies to lead a worldwide COVID-19 immunization strategy and expand debt relief to developing countries hit by the outbreak last month.
He also recommended that the IMF implement a new $50 billion investment roadmap focused on ending the pandemic and accelerating recovery.
Because many developing countries are “on the verge of debt default,” the UN head urged the G20’s major developed nations to direct unused SDRs to the Fund’s new resilience and sustainability strategy, which will benefit these countries. He emphasized that Special Drawing Rights must be viewed as additional cash, not as a reduction in Official Development Assistance.