Egypt will receive a foreign currency boost equivalent to around $2.8 billion through the International Monetary Fund’s (IMF) $650 billion latest special drawing rights (SDRs) — the largest allocation in its history — to all 190 member countries.
The SDR allocation was made to IMF members that are participants in the Special Drawing Rights Department (currently all 190 members), a “significant shot in the arm” to emerging and low-income nations to support the global recovery from the pandemic, the fund’s Managing Director Kristalina Georgieva said in a release.
It will benefit all IMF members address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.
The latest allocation brings the total value of SDRs Egypt had obtained so far from the IMF to some $4 billion. The North African country has received as much as $1.1 billion in SDRs — allocated in proportion to members’ existing quotas in the IMF, with Egypt’s amounting to 0.43 percent — in August 2009 as part of a general allocation of $250 billion geared towards providing liquidity to the global economic system.
The fund’s latest largest-ever distribution of monetary reserves — which Barclays had earlier said would particularly benefit Egypt — will provide additional liquidity for global economies, supplement their foreign exchange reserves, and lower their reliance on more expensive domestic or external debt, Georgieva added.
Kristalina Georgieva, managing director of the International Monetary Fund (IMF) (Photo Credit: Kim Haughton/IMF/Handout via Xinhua)
“To support countries, and help ensure transparency and accountability, the IMF is providing a framework for assessing the macroeconomic implications of the new allocation, its statistical treatment and governance, and how it might affect debt sustainability. The IMF will also provide regular updates on all SDR holdings, transactions, and trading – including a follow-up report on the use of SDRs in two years’ time.”
SDRs act as a kind of international reserve currency or asset designed to serve as a supplement to IMF member countries’ reserves. They were initiated in 1969 to create an alternative to gold and USD as the only two global reserve assets. While not currencies in themselves, SDRs are held by the IMF’s member countries as a way to hedge against their dependence on costly debt to build up stocks of foreign reserves.
