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The International Monetary Fund has agreed to increase the finances of low- and middle-income countries by allocating $650 billion in special drawing rights to support their response to the epidemic.
distribute, This is a form The foreign exchange reserve assets are equivalent to the newly minted currency, which will be roughly proportionally distributed to the 190 member countries of the fund according to its share in the global economy. Approximately US$275 billion of allocations will be used for emerging and developing countries, and the rest will be used for the world’s largest economy.
IMF president Kristalina Georgieva (Kristalina Georgieva) said in a statement on Monday: “This is a historic decision-this is the largest allocation of special drawing rights in the history of the IMF. It is also a boost to the global economy in an unprecedented period of crisis.”
“The allocation of special drawing rights will benefit all members, meet the long-term global demand for reserves, build confidence, and promote the resilience and stability of the global economy. It will especially help our most vulnerable countries in their efforts to cope with the impact of the Covid-19 crisis. .”
The statement was issued at a critical moment in developing economies.Recovery in many countries is faltering as they suffer from an increase in the number of Covid-19 cases and deaths, as well as a more contagious spread Delta variantThe International Monetary Fund recently listed limited access to vaccines as a major disadvantage reduce Its 2021 growth forecast for emerging and developing economies has been revised up by 0.4 percentage points to 6.3%.
Allocate new special drawing rights for emerging and developing countries
The provision of special drawing rights does not have the conditions normally attached to IMF loans, nor does it have to be repaid, allowing the government to Use them for free As they wish, they do not take compensation measures to support public finances.
Georgieva pointed out in the funding proposal last month that more than half of emerging and developing countries entered a pandemic with insufficient funds, and many countries were forced to run out of reserves to deal with the crisis.
Central banks in advanced economies have injected trillions of dollars into the financial system, which has made access to global capital flows easier, but policymakers can no longer be counted on Consider withdrawing Support, she said.
Many observers Call on rich countries Donate special drawing rights to poor countries where they need it more. On Monday, Georgieva said that the IMF will seek to advance these efforts.
She said: “We will also continue to actively engage with our members to determine viable options for transferring SDRs from richer member states to poorer and more vulnerable member states to support its pandemic recovery. And achieve resilient and sustainable growth.”
Some countries, including Japan, France, the United Kingdom, and Italy, provided special drawing rights to the International Monetary Fund’s Poverty Reduction and Growth Trust Fund, which provided emergency funds to several poor countries during the pandemic. However, most of the PRGT’s funds are conditional and must be repaid, which makes it less advantageous to recipients.
The member states of the IMF voted for the distribution after obtaining the approval of the organization’s executive board in early July. The United States has enough votes due to its economic size to exercise its unilateral veto power. Block distribution When former President Donald Trump first proposed in 2019, the Joe Biden administration quickly He expressed support When he took office in January.
The distribution will take place on August 23.
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