The IMF authorized more banks to acquire and use crisis reserves

He International Monetary Fund I authorize five development banks acquire and hold crisis reserveswhich brings to 20 the number of institutions with such rights and allows more opportunities for support for financially fragile countries.

The Caribbean Development Bank, the Latin American Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank and the Inter-American Development Bank may become prescribed holders of the so-called special drawing rights (SDRs), the Fund said Tuesday in a statement.

The Washington-based executive board approved the banks’ permit application on February 8. In addition to owning and acquiring reserves, prescribed holders can use them in transactions by agreement and in operation, the fund said.

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In 2021, the IMF created the record amount of US $ 650,000 million in DEG to face the consequences of the pandemic. IMF Managing Director Kristalina Georgieva has urged rich nations to redirect some of their SDR allocation to countries most in need and has touted the idea of ​​channeling their support through multilateral development banks, though that has not been done. until now.

The South African President, Cyril Ramaphosa has called on rich nations to donate, not just lend, their allocations.

pressure from the south

He African Development Bank He said in June last year that he is lobbying rich nations to use their rights to the IMF’s reserve assets to help him raise funds to support poorer countries, the first initiative of its kind by a multilateral bank.

He Inter-American Development Bank, which serves Latin America, is now working with the AfDB on a proposal to rechannel SDRs, and they have consulted the IMF on technical issues, a spokesman for the fund said on Tuesday.

According to the mechanism, taxpayers would use their SDR holdings to acquire a hybrid capital instrument that the multilateral development bank could count as equity, according to the spokesperson.

LM / MCP