VENICE, Italy – The International Monetary Fund wants G20 countries to decide on a clear path over the next two days for allowing rich countries to contribute some $100 billion worth of newly issued IMF reserves to poorer countries, the Fund’s No. 2 official told Reuters on Friday.
IMF First Deputy Managing Director Geoffrey Okamoto said his goal was to be able to present a viable option for channeling newly issued Special Drawing Rights to countries in need by the time the $650 billion allocation is completed at the end of August.
“Countries expect us to have an option ready to go. We’re doing all we can to secure agreement on an option that we can begin implementing once the allocation is made,” Okamoto said in an interview on the sidelines of a G20 finance ministers and central bank governors meeting here.
The IMF SDR plan will distribute reserves to all 190 member countries in proportion to their ownership, with the lion’s share going to G20 countries. SDRs are the IMF’s unit of exchange, made up of dollars, euros, yen, sterling and yuan. To spend them, countries must arrange an exchange for underlying currencies.
In a draft G20 communique seen by Reuters, the finance officials called on the IMF to “to quickly present actionable options for countries” to channel part of their allocated SDRs to aid pandemic recovery, including through the creation of a new trust fund.
The communique as currently written did not specifically endorse the IMF’s $100 billion SDR channeling goal but called for “an ambitious target in support of vulnerable countries.”
The IMF has proposed creating a new Resilience and Sustainability Trust that would include some vulnerable middle income countries and small island states, working alongside the Poverty Reduction and Growth Trust for aiding the poorest countries.
