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A Shot in the Arm—How Special Drawing Rights Can Help Struggling Countries

Summary:
By IMFBlog The largest allocation of Special Drawing Rights, or SDRs, in history—about 0 billion—came into effect earlier this week. The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis. The SDR allocation will provide additional liquidity to the global economic system—supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt. Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the crisis. SDRs are being distributed to countries in proportion to their quota shares in the IMF. This means about 5 billion is going to emerging and developing countries, of which low-income

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By IMFBlog

The largest allocation of Special Drawing Rights, or SDRs, in history—about $650 billion—came into effect earlier this week. The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis.

The SDR allocation will provide additional liquidity to the global economic system—supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt. Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the crisis.

SDRs are being distributed to countries in proportion to their quota shares in the IMF. This means about $275 billion is going to emerging and developing countries, of which low-income countries will receive about $21 billion—equivalent to as much as 6 percent of GDP in some cases.

Read more about the historic allocation and how many of the IMF’s poorest member countries can benefit.

A Shot in the Arm—How Special Drawing Rights Can Help Struggling Countries

And listen to the podcast by Ceyla Pazarbasioglu, head of the Strategy, Policy and Review Department at the IMF, where she explains why the SDR allocation will go a long way toward helping vulnerable countries.

 

 

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