WASHINGTON (AP) – The governing body of the International Monetary Fund has approved an $ 650 billion expansion of the agency’s resources to help economically vulnerable countries struggling with the coronavirus pandemic and the economic downturn it has caused.
The lending institution from 190 countries said on Monday that its board had approved the expansion of reserves known as Special Drawing Rights, the largest increase in the institution’s history.
“This is a historic decision … and a shot in the arm of the world economy at a time of unprecedented crisis,” said IMF Managing Director Kristalina Georgieva. “This will help especially our most vulnerable countries, which are struggling to cope with the impact of the COVID-19 crisis.”
The total distribution of SDRs will take effect on August 23. The IMF said the new reserves would be credited to IMF member countries in proportion to their existing quotas at the agency. About $ 275 billion of the new distribution will go to the world’s poorest countries.
The agency is also looking for ways for richer countries to voluntarily target SDRs to poorer countries, the agency said.
The big push on IMF resources was rejected by the Trump administration. But after President Joe Biden took office in January, Treasury Secretary Janet Yellen backed her proposal.
Many Republican members of Congress have objected to the increase in SDRs, saying expanded IMF resources will benefit US adversaries such as China, Russia and Iran. However, the increase in resources has been strongly supported by international support agencies.
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