IMF member countries’ kitty to get Ksh.70.3 trillion
The International Monetary Fund (IMF) Executive Board has agreed on a proposal for a new general Special Drawing Rights (SDR) allocation to its member countries to a tune of Ksh.70.3 trillion (US$.650 billion).
The allocation will be the largest in the multilateral lender’s history to address the long-term global needs for reserves during the worst crisis since the Great Depression.
“I will now present the new SDR allocation proposal to the IMF’s Board of Governors for their consideration and approval. If approved, we expect the SDR allocation to be completed by the end of August,” said IMF MD Kristalina Georgieva.
This is a shot in the arm for the world with the allocation expected to boost the liquidity and reserves of al its member countries.
It will build confidence, and foster the resilience and stability of the global economy.
In 2009, an SDR allocation contributed significantly to recovery from the global financial crisis with Georgieva expressing confidence that the new allocation will have a similar benefit now.
“The SDR allocation will help every IMF member country particularly vulnerable countries and strengthen their response to the COVID19 crisis,” she said.
How many SDRs have been allocated so far?
The Fund has allocated a total of SDR 204.2 billion, equivalent to about Ksh.34.4 trillion (US$.318 billion), including three general allocations.
The first was approved between 1970-72 at a tune of SDR 9.3 billion – US$.13.2 billion and was done in yearly instalments.
It was followed by SDR 12.1 billion – US$.17.2 billion and was allocated in yearly instalments in 1979–81.
The last to be allocated was SDR 161.2 billion – US$.229.3 billion on August 28, 2009, by far the biggest allocation to date.
The US$.650 billion allocation is currently in the pipe and if approved, will be the largest kitty in history to be allocated to IMF member states.
What is SDR?
The SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.
Kenya is one of IMF’s members states, and it joined the list in the year 1965, two years after the country was declared a republic in December 1964.
The SDR is not a currency but a potential claim on the freely usable currencies of IMF members. As such, SDRs can provide a country with liquidity.
Global currencies that define SDR ARE; US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.
1 SDR = 1.42259 USD