WASHINGTON (Reuters) – Increasing the emergency reserves of the International Monetary Fund by $650 billion could boost confidence and growth in the global economy as it recovers from the coronavirus pandemic, IMF spokesman Gerry Rice said on Thursday.
IMF Managing Director Kristalina Georgieva on Tuesday announced plans to present the IMF’s executive board with a formal proposal for a possible $650 billion allocation of the IMF’s Special Drawing Rights (SDRs) by June, raising the liquidity of members without increasing their debt burdens.
Rice told a regular IMF briefing that the Fund’s last issuance of $250 billion in SDRs, the IMF’s own currency, in 2009 during the global financial crisis had helped underpin a recovery.
“The last time … it helped the global economy to recover. It helped to boost confidence and growth at that time. And we believe it can do so again,” Rice said.
It would also free up resources for member countries to help fight the pandemic, support vaccination programs and other urgent measures, Georgieva said on Tuesday.
Georgieva is due to preview the Fund’s new World Economic Outlook next Tuesday, with the formal release of the global economic projection to be released on April 6, Rice said.
If approved as expected, the additional reserves – which can be turned into hard currencies by members or shared with needier countries – should be available later this year.
Georgieva began pushing for a new SDR allocation a year ago, but met strong resistance from the United States, the largest shareholder in the global lender, under the former Trump administration.
Both the Group of Seven advanced economies and the larger Group of 20 major economies backed the move in recent weeks after new U.S. Treasury Secretary Janet Yellen offered her qualified support while also demanding greater transparency about how the SDRs would be used and traded.
(Reporting by Andrea Shalal; editing by Jonathan Oatis)
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