IMF Wants 650 Billion Dollars in Additional Emergency Reserves
The International Monetary Fund (IMF) wants to increase the emergency reserves of member countries by 650 billion dollars.
In particular, this should give poorer countries and emerging economies the necessary financial breathing space to combat the corona pandemic.
IMF top woman Kristalina Georgieva will present a formal proposal of the reserves in June. This is done by creating additional so-called Special Drawing Rights (SDRs), the value of which is based on a basket of five commonly used coins. Countries can use this to supplement their international reserves and, for example, sell them for euros or dollars if state finances require it.
The last time the IMF created additional emergency reserves was in 2009 due to the global financial crisis. Then member states of the fund agreed to distribute SDRs worth $ 250 billion.
If member states agree to Georgieva’s proposal, that would be a major step. To date, including the move in 2009, the IMF has created and distributed the equivalent of $ 293 billion in additional SDRs. According to the Bulgarian, the move is an excellent opportunity to give financially tight countries due to the corona crisis a “liquidity boost” without increasing their debts.
Georgieva has been arguing for the distribution of new emergency reserves for some time, but the IMF members must agree to this. The United States, under former President Donald Trump, opposes such a move.
The Biden government is more positive. For example, the current Treasury Secretary Janet Yellen said that such a step would also be in the Americans’ national interest because the rapid economic recovery of developing countries also benefits the US.