IMF lends a hand
PremiumThe new SDR allotments should help broad-base a revival from the pandemic’s ravages. Low-income countries that are dangerously over-indebted, in particular, could be in for some relief
As the world looks for more resources to sustain economies reeling under the impact of covid, the International Monetary Fund (IMF) has announced help. This week, it approved a staggering $650 billion by way of special drawing rights, or SDRs, to boost liquidity. SDRs are reserve assets allocated to member countries in proportion to their quotas, and can be exchanged for currencies. To put the quantum of money in context, consider this: the allocation is the highest ever by the IMF. In 2009, when it last made such an intervention amid the global financial crisis, it had allocated SDRs of $250 billion.
This support should provide the global economy a greater chance at stability. Its recovery has been uneven, with some economies like the US bouncing back strongly, even as most others across the globe lag. The new SDR allotments, thus, should help broad-base a revival from the pandemic’s ravages. Low-income countries that are dangerously over-indebted, in particular, could be in for some relief. Should global capital flows stage a sudden reversal, several other countries might need lifelines, too. Covid resilience can be a tough ask and the IMF has recognized as much.
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