India to get $4.78 bn in SDRs to battle recession
India will get the equivalent of about $4.78 billion as its share of International Monetary Fund's Special Drawing Rights to provide liquidity to the recession hit global economic system.business Updated: Aug 14, 2009 10:07 IST
India will get the equivalent of about $4.78 billion as its share of International Monetary Fund's (IMF) Special Drawing Rights (SDR) worth $250 billion to provide liquidity to the recession hit global economic system.
IMF will make the general SDR allocation on Aug 28 following formal approval by its board of governors last week of the proposal to allocate SDRs equivalent to $250 billion to provide liquidity to the global economic system by supplementing the Fund's member countries' foreign exchange reserves.
The SDR allocation was requested as part of a $1.1 trillion plan agreed at the G20 summit in London in April and endorsed by the International Monetary and Financial Committee (IMFC) to tackle the global financial and economic crisis by restoring credit, growth and jobs in the world economy.
The equivalent of nearly $100 billion of the general allocation will go to emerging markets and developing countries, of which low-income countries will receive over $18 billion, IMF said Thursday.
The allocation will provide each participating country with SDRs in amounts equivalent to approximately 74 percent of its quota, and could increase Fund members' total allocations to an amount equivalent to about $283 billion, from about $33 billion (SDR 21.4 billion).
Separately, the fourth amendment to the IMF articles of agreement providing for a special one-time allocation of SDRs has now entered into force.
The special allocation will be made to IMF members on Sep 9, 30 days after the effective date of the fourth amendment, and will raise the ratios of members' cumulative SDR allocations to quota using a common benchmark ratio as described in the amendment.
The total of SDRs created under the special allocation would amount to SDR 21.5 billion (about $33 billion).
The special allocation will make the allocation of SDRs more equitable and correct for the fact that countries that joined the Fund after 1981 -- more than one fifth of the current IMF membership -- had never received an SDR allocation, IMF said.
The fourth amendment, which was proposed in September 1997, required approval by three fifths of the IMF membership with 85 percent of the total voting power. This threshold has been reached following the recent approval by the US.
The special and general allocations will bring Fund members' cumulative total of SDR allocation to SDR 204 billion (about $316 billion).
The general SDR allocation is a key example of a cooperative multilateral response to the global crisis, offering significant support to the Fund's members in this challenging period, IMF said.