IMF Gave $650 Billion to Member Countries
The International Monetary Fund (IMF) has approved the largest ever monetary reserve distribution to mitigate the impact of COVID-19.
- The International Monetary Fund has approved the allocation of $650 billion of IMF Special Drawing Rights (SDR) to member countries. This is in proportion to the existing quota share of the member countries in this fund.
- India’s quota is 75 percent and China’s quota is 6.41 percent, while America’s quota is 17.46 percent.
Significance:
- All the member countries will benefit from this allocation. This will meet the long-term global need for reserves. At the same time, confidence will be built and it will be possible to increase the resilience and stability of the global economy.
- This allocation will help the most vulnerable countries to deal with the impact of the Kovid-19 crisis.
About Special Drawing Rights (SDR):
- It is an international reserve asset. It was created by the IMF in the year 1969 to supplement the official reserves of its member countries.
- The value of SDR is based on five currencies viz. US Dollar, Euro, Chinese Renminbi, Japanese Yen and British Pound Sterling.
- It is neither a currency nor a claim on the IMF. This is a potential claim on freely disposable currencies of IMF members.
- SDR can be exchanged for these currencies.
- The voting power of IMF member states is directly related to their quota.
Source – The Hindu
