Nigeria is expected to receive the sum of $3.35 billion from the $650 billion approved by the Board of Governors of the International Monetary Fund (IMF) as a general allocation of Special Drawing Rights (SDRs) equivalent to $650 billion to boost global liquidity.
The IMF, in a statement, explained that SDRs are supplementary foreign exchange reserve assets defined and maintained by the IMF. They are units of account for the IMF, and not a currency per se. Also, they represent a claim to currency held by IMF member countries for which they may be exchanged. SDRs were created in 1969 to supplement a shortfall of preferred foreign exchange reserve assets, namely gold and United States dollars.
The Managing Director, Kristalina Georgieva, was quoted to have said that: “This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis.
“The SDR allocation will benefit all 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.”
According to the statement, It revealed that the general allocation of SDRs would become effective on August 23, 2021.
According to the statement, the newly created SDRs would be credited to IMF’s member countries in proportion to their existing quotas in the Fund.
It further pointed out that about $275 billion (about SDR 193 billion) of the new allocation would go to emerging markets and developing countries, including low-income countries.
“We will also continue to engage actively with our membership to identify viable options for voluntary channeling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth,” it added.
It further said one key option is for members that have strong external positions to voluntarily channel part of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT).
