Money & Banking

IMF allocates 12.57 billion SDRs to India

Our Bureau Mumbai | Updated on September 01, 2021

Allocation is about 2.75% of overall SDRs allocated

The International Monetary Fund (IMF) has made an allocation of Special Drawing Rights (SDR) 12.57 billion (equivalent to around $17.86 billion at the latest exchange rate) to India on August 23, 2021.

This allocation is about 2.75 per cent of the overall 456.5 billion SDRs general allocation made to the Fund's member countries. IMF has a membership of 190 countries.

SDR is an interest-bearing international reserve asset created by the IMF in 1969 to supplement other reserve assets of member countries. SDR holdings is one of the components of the foreign exchange reserves (FER) of a country.

Following the allocation, India’s total SDR holdings now stand at SDR 13.66 billion (equivalent to around $19.41 billion at the latest exchange rate) as of August 23, 2021, the Reserve Bank of India (RBI) said in a statement. This increase in SDR holdings will be reflected in the FER data that shall be published for the week-ended August 27, 2021, it added.

IMF makes the general SDR allocation to its members in proportion to their existing quotas in the Fund.

RBI said that the board of Governors of the IMF had approved a general allocation of about SDR 456 billion on August 2, 2021 (effective from August 23, 2021) of which the share of India is SDR 12.57 billion.

The SDR is based on a basket of international currencies comprising the US dollar, Japanese yen, euro, pound sterling and Chinese Renminbi. It is not a currency, nor a claim on the IMF, but is potentially a claim on freely usable currencies of IMF members.

According to IMF, an SDR allocation is a way of supplementing its member countries’ FER, allowing them to reduce their reliance on more expensive domestic or external debt for building reserves.

IMF general allocation

IMF said the general allocation of SDR 456.5 billion (equivalent to about $650 billion) implemented on August 23, 2021, addresses the long-term global need for reserves, builds confidence, and supports a sustainable and resilient global recovery.

SDR benefits all member States and helps emerging markets and low-income countries struggling to cope with the impact of the Covid-19 crisis.

The Fund noted that this general allocation, by far the largest to date, is a prime example of an international cooperative response to the Covid-19 pandemic.

Published on September 01, 2021

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