The International Monetary Fund (IMF) is expected to inject on August 23 a whopping USD650 billion, to aid low-income and developing countries deal with a mounting debt driven by the COVID-19 global economic crisis.
The USD 650 billion will enable the 190 member countries to access new borrowing in proportion to their share of the global economy.
The injection will be made possible under Special Drawing Rights known as SDRs, an international reserve asset convertible into the dollar, euro, yen, British pound and yuan.
“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis”, said IMF Managing Director Kristalina Georgieva.
Under IMF guidelines, the injection will be proportionately distributed based on each country’s share in the fund, almost equal to their economic output. Bloomberg explains 58% of the new SDRs will go to advanced economies, while only 3.2% of the injection will reach low-income countries.
To aid poorer countries access more wealth, Bloomberg reports the IMF is working to set up ta Resilience and Stability Trust by the end of 2021, allowing rich nations to redirect their reserves to middle and low-income states.
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