India to get USD 4.78 bn SDRs to battle economic recession
India has been allocated the equivalent of about USD 4.78 billion as its share of International Monetary Fund's Special Drawing Rights worth USD 250 billion announced to provide liquidity to the global economic system.business Updated: Jul 21, 2009 08:52 IST
India has been allocated the equivalent of about $4.78 billion as its share of International Monetary Fund's Special Drawing Rights (SDR) worth $250 billion announced on Monday to provide liquidity to the recession-hit global economic system.
The equivalent of nearly $100 billion of the new allocation to supplement IMF's 186 member countries' foreign exchange reserves will go to emerging markets and developing countries, of which low-income countries will receive over $18 billion, IMF said.
The proposal backed by Executive Board will now be submitted to the IMF's Board of Governors for final approval.
"The SDR allocation is a key part of the Fund's response to the global crisis, offering significant support to its members in these difficult times," IMF Managing Director Dominique Strauss-Kahn said.
The SDR allocation was requested as part of a $1.1 trillion plan agreed at the G-20 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.
If approved by the Board of Governors with an 85 per cent majority of the total voting power in a vote scheduled to close August 7, the SDR allocation will be in effect on August 28.
"The allocation is a prime example of a cooperative monetary response to the global financial crisis," Strauss-Kahn said.
The SDR allocation will be made to IMF members in proportion to their existing quotas in the Fund, which are based broadly on their relative size in the global economy.
The operation will increase each country's allocation of SDRs by approximately 74 per cent of its quota, and Fund members' total allocation to an amount equivalent to about $283 billion, from about $33 billion (SDR 21.4 billion).
SDRs allocated to members will count toward their reserve assets, acting as a low cost liquidity buffer for low-income countries and emerging markets and reducing the need for excessive self-insurance, IMF said.