IMF to inject $250 bn into members` forex reserves

Last Updated: Friday, August 14, 2009 - 00:06

Washington: The International Monetary
Fund on Thursday said it would inject USD 250 billion into foreign
exchange reserves of member nations to boost liquidity amid
the global economic crisis.

Employing a rarely used tool, the IMF board of
governors approved the allocation of Special Drawing Rights
(SDRs) equivalent to USD 250 billion, the multilateral
institution said in a statement.
It was by far the largest general SDR allocation in
the institution`s six-decade history and will take effect
August 28.

For countries that joined the IMF after 1981 -- more
than one-fifth of the current membership -- this will be their
first time receiving an SDR allocation.

The IMF board of governors endorsed on August 7 the
proposed special SDR allocation that had been endorsed by the
institution`s executive board on July 17.

An SDR is an interest-bearing IMF asset that is based
on a basket of international currencies -- the dollar, yen,
euro and pound -- that is calculated daily and which members
can convert into other currencies.

The general increase in SDRs was part of a USD 1.1
trillion plan agreed at the Group of 20 summit in London in
early April to tackle the global financial and economic
crisis.

All 186 IMF member nations will share in the
allocation "in proportion to their existing quotas in the
fund, which are based broadly on their relative size in the
global economy," the Washington-based institution said.

Bureau Report



First Published: Friday, August 14, 2009 - 00:06

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