From Uche Usim, Abuja
To boost global liquidity amid widespread COVID-19 challenges, the Board of Governors, International Monetary Fund (IMF) has approved a general allocation of Special Drawing Rights (SDRs) 456 billion, of equivalent of $650 billion for Nigeria and other countries battling funding challenges.
Affected countries will be able to access the IMF facilities to help them battle the resurgent COVID-19 pandemic and ultimately strengthen their economies.
IMF Managing Director, Ms Kristalina Georgieva, in a statement described the SDRs as the largest allocation in the history of the organisation.
She 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.”
According to her, the general allocation of SDRs would become effective on August 23, 2021.
The newly-created SDRs would be credited to IMF member countries in proportion to their existing quotas in the Fund.
According to the IMF, 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 added.
Nigeria was allocated about $3.35billion as part of a historic general allocation of SDR. The IMF boss further said one key option for members with strong external positions would be 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 said it was also exploring other options to help poorer and more vulnerable countries in their recovery efforts through a possible new Resilience and Sustainability Trust.
In April 2020, Nigeria collected $3.4 billion equivalent to 100 per cent of its quota under the IMF’s Rapid Financing Instrument, RFI, to tackle the funding gaps created by COVID-19, especially when the crude oil market sunk to lowest position.
The financial buoy, approved by the IMF Executive Board on April 28, 2020, provided critical support to shore up Nigeria’s healthcare sector and insulated jobs and businesses from being fractured by COVID-19 pestilence.