IMF board backs US$650-billion reserves plan

The board of directors of the International Monetary Fund (IMF) yesterday took the first step towards approving a record package of US$650-billion worth of special drawing rights for its members to counter the coronavirus pandemic, of which Argentina stands to net US$4.3 billion in the last quarter of the year, arriving in the Central Bank.

Following approval by the 24-member board headed by IMF Managing Director Kristalina Georgieva, the multi-billion initiative now only awaits approval by the Economy ministers of member countries in the course of July and August.  

The IMF's board gave its unanimous support to a proposal to create new reserves for its members, bringing the plan to increase resources for nations struggling with the pandemic one step closer to final approval.

The plan still requires final approval by the board of governors -- composed of representatives, normally the finance minister or central bank head, of the 190 IMF member countries. Georgieva previously said that she expects that in August.

Officially, the next step is for Georgieva to prepare a report for the board of governors, which requires the executive board approval. Spokesman Gerry Rice said the fund expects that could happen around mid-July. But after Friday’s discussion, that basically amounts to an administrative step, according to one of the people familiar with the process.

The IMF press office confirmed that the proposal on the creation of the reserves, known as special drawing rights, or SDRs, was discussed on Friday, but declined to comment on the executive board’s reaction.

The Fund is preparing to give its member countries the biggest resource injection in its history to boost global liquidity and help emerging and low-income nations deal with mounting debt and the fallout from the Covid-19 pandemic.

– TIMES/BLOOMBERG