The International Monetary Fund (IMF) has backed an allocation of Special Drawing Rights (SDRs) equivalent to $250 billion to boost global liquidity 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 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 US$1.1 trillion plan agreed at the G-20 summit in London in April and endorsed by the International Monetary and Financial Committee (IMFC).
The allocation is a prime example of a cooperative monetary response to the global financial crisis, said Strauss-Kahn.
The SDR allocation will be made to IMF members that are participants in the Special Drawing Rights Department 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 dollars, from about 33 billion dollars.
The proposal will now be submitted to the IMF’s Board of Governors for final approval.
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 28.