Washington: International Monetary Fund (IMF) assigns its historically biggest aid package of $650 billion of Special Drawing Rights (SDR) to cater to the adverse consequences caused by the world epidemic of COVID-19. It is expected that this plan will result in Pakistan getting additional funding of $2.7 billion.
The Special Drawing Right is an interest-bearing international reserve that allocates its value as per a select basket of currencies that can be held and used by member states.
These SDRs will be supplied as per a country’s quota shares in the IMF, which amounts to about $275 billion going to emerging economies.
According to Managing Director Kristalina Georgieva, this plan is “The largest allocation of Special Drawing Rights (SDRs) in history and about US$650 billion comes into effect today. 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 director added, “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.”
Additionally, she added that “SDRs are a precious resource and the decision on how best to use them rests with our member countries. For SDRs to be deployed for the maximum benefit of member countries and the global economy, those decisions should be prudent and well-informed.”
It is also informed that IMF members can utilize the SDRs in a number of ways such as arranging authorized operations (loans and payment of obligations), and exchange under voluntary or mandatory designation plans with externally strong members.
