Press Release: IMF Executive Board Modifies Rule for Setting SDR Interest Rate

IMF News, October 24, 2014

Source details

Canonical URL: Press Release: IMF Executive Board Modifies Rule for Setting SDR Interest Rate

Introduced a floor for the Special Drawing Right (SDR) interest rate of 0.050 percent (5 basis points).
Changed the rounding convention for calculating the SDR interest rate from two to three decimal places.
Made a corresponding change in the rounding convention for the burden sharing mechanism.
Reduced the minimum burden sharing adjustment from 1 basis point to 0.1 basis point.

In view of the prevailing interest rates, the SDR interest rate for the next weekly period starting Monday, October 27, will be established at the floor of 0.050 percent.

The SDR interest rate provides the basis for:
- calculating the interest charged to members on nonconcessional IMF loans from the IMF’s general resources,
- the interest paid to IMF members on their remunerated creditor positions in the IMF (reserve tranche positions and claims under borrowing agreements),
- the interest paid to members on their SDR holdings and charged on their SDR allocation.
The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term financial debt instruments in the money markets of the SDR basket currencies, except if the weighted average falls below the floor for the SDR interest rate of 0.050 percent (5 basis points).

Under the burden sharing mechanism, debtor and creditor members as a group share equally the cost of unpaid charges on outstanding IMF credit through adjustments to the rates of charge and remuneration.
The Executive Board amended the rounding convention for the burden sharing mechanism and reduced the minimum burden sharing adjustment from 1 basis point to 0.1 basis point.

Press Release No. 14/484 — October 24, 2014