SOFIA: The IMF is set to vote on a proposal to increase the institution's lending capacity by $650 billion "in the coming days," Managing Director Kristalina Georgieva said on Thursday.
As countries look to recover from the massive economic damage caused by the Covid-19 pandemic, the IMF has been mulling an increase in its special drawing rights (SDR), which are international reserve assets that aid governments in protecting their financial reserves against global currency fluctuations, and also help the IMF calculate loans and interest rates.
The G7 and G20 groups of nations have endorsed the proposal, and late last month the Washington-based crisis lender's executive board approved the increase.
"We expect in the coming days the board of governors of the fund to table for approval by all member states a proposal for emitting $650 billion dollars in special drawing rights," Georgieva said in Sofia, Bulgaria during a summit of the Three Seas Initiative, which brings together the 12 European Union nations bordering the Baltic, Adriatic and Black seas.
While the new reserves may be approved in the coming days, IMF spokesman Gerry Rice said last month that the actual allocation wouldn't take place before the end of August due to the complexity of the process.
"Why is this important? It is an injection in the reserves of all members of the fund, providing a lot of space, a lot of space for fiscal actions" at a time when the economy stopped because of Covid, Georgieva said, adding the increase would be the largest in the IMF's history.