IMF chief cheers lending expansion ahead of G20 meeting

WASHINGTON: IMF Managing Director Kristalina Georgieva said Friday the Fund's executive board has backed increasing its special drawing rights (SDR) by $650 billion as it looks to support countries recover from the Covid-19 crisis.

The increase would be the biggest ever for SDRs, 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 IMF Executive Board yesterday concurred in my proposal for a new general SDR allocation equivalent to US$650 billion -- the largest allocation in the IMF's history -- to address the long-term global needs for reserves during the worst crisis since the Great Depression," Georgieva said in a statement.

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"This is a shot in the arm for the world. The SDR allocation will boost the liquidity and reserves of all our member countries, build confidence and foster the resilience and stability of the global economy."

If approved by the Washington-based crisis lender's Board of Governors, the new SDR allocation will be completed by the end of August, Georgieva said.

It "will help every IMF member country -- particularly vulnerable countries -- and strengthen their response to the Covid-19 crisis," she said.

The G20 finance ministers from the world's richest nations are meeting Friday and Saturday and are expected mainly to discuss a global proposal to tax multinationals more fairly.

Georgieva has called on the G20 to step up efforts aiding the poorest countries withstand the "devastating double-blow" of the pandemic and the resulting economic damage.