## IMF Managing Director Announces the US$650 billion SDR Allocation Comes into Effect

_IMF News, August 23, 2021_

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## Bibliographic details
- Published: August 23, 2021

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### Overview
- The largest allocation of Special Drawing Rights (SDRs) in history—about US$650 billion—comes into effect on August 23, 2021.
- The allocation is described as a significant "shot in the arm" for the world and a unique opportunity to combat the COVID-19 crisis if used wisely.

### Allocation breakdown and macroeconomic implications
- SDRs are distributed to countries in proportion to their quota shares in the IMF.
- About US$275 billion is going to emerging and developing countries.
- Low-income countries will receive about US$21 billion—equivalent to as much as 6 percent of GDP in some cases.
- The allocation will provide additional liquidity to the global economic system, supplementing countries’ foreign exchange reserves and reducing reliance on more expensive domestic or external debt.
- Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the crisis.

### IMF support, transparency, and analytical framework
- The IMF will provide a framework for assessing:
  - The macroeconomic implications of the new allocation,
  - Its statistical treatment and governance,
  - How it might affect debt sustainability.
- The IMF will provide regular updates on all SDR holdings, transactions, and trading.
- The IMF will publish a follow-up report on the use of SDRs in two years’ time.

### Voluntary channeling and concessional finance
- The IMF is encouraging voluntary channeling of some SDRs from countries with strong external positions to countries most in need.
- Over the past 16 months, some members have pledged to lend US$24bn, including US$15 billion from their existing SDRs, to the IMF’s Poverty Reduction and Growth Trust.
  - The Poverty Reduction and Growth Trust provides concessional loans to low-income countries.
- The IMF states this US$24bn is "just a start" and will continue to work with members to build on this effort.

### Potential uses of channeled SDRs
- The IMF is engaging with members on the possibility of a new Resilience and Sustainability Trust, which could:
  - Use channeled SDRs to help the most vulnerable countries with structural transformation,
  - Include confronting climate-related challenges.
- Another possibility is to channel SDRs to support lending by multilateral development banks.

### Context within the IMF’s broader pandemic response
- This SDR allocation is listed as a critical component of the IMF’s broader effort, which also includes:
  - US$117 billion in new financing for 85 countries;
  - Debt service relief for 29 low-income countries;
  - Policy advice and capacity development support to over 175 countries to help secure a strong and more sustainable recovery.

### Additional reference
- Link to more information on SDRs: Special Drawing Rights (imf.org)

*Source: Press Release No. 21/248, IMF Communications Department, August 23, 2021.*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Special Drawing Rights (imf.org)](https://www.imf.org/en/Topics/special-drawing-right)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/08/23/pr21248-imf-managing-director-announces-the-us-650-billion-sdr-allocation-comes-into-effect_