Nigeria Gets $3.35bn SDR Allocation from IMF

August 4, 2021
imf-office

By Adedapo Adesanya

Nigeria has been allocated about $3.35 billion as part of a historic SDR456 billion Special Drawing Rights (SDRs) by the International Monetary Fund (IMF).

The global lender, as part of efforts to boost global liquidity as the world economy faces an unprecedented crisis, approved the general allocation of SDRs equivalent to $650 billion to boost the global economy.

The amount allocated to Nigeria is as a result of the exchange rate of reference which is 0.702283 SDR equivalent to a Dollar, meaning that and Nigeria has 2.4545 billion SDRs.

Although it is not a currency, the SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.

It is a potential claim on the freely usable currencies of IMF members and can provide a country with liquidity. The SDR is defined by the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

Speaking on the development, IMF Managing Director, Ms Kristalina Georgieva, said, “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.”

The general allocation of SDRs will become effective on August 23, 2021.

The newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.

About $275 billion (about SDR 193 billion) of the new allocation will 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 channelling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth,” Ms Georgieva 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). Concessional support through the PRGT is currently interest-free.

The IMF is also exploring other options to help poorer and more vulnerable countries in their recovery efforts. A new Resilience and Sustainability Trust could be considered to facilitate more resilient and sustainable growth in the medium term.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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