Global Economy

Help low-income countries use SDRs effectively to fight Covid, India to IMF

India has urged the International Monetary Fund (IMF) to help low-income countries to use their special drawing rights, or SDRs, effectively to overcome the impact of the Covid-19 pandemic.

“The IMF should provide necessary policy and capacity support to low-income countries for effective use of the SDR allotted recently,” finance minister Nirmala Sitharaman said in her intervention at the plenary meeting of the international monetary and financial committee of the board of governors of the IMF in Washington DC on Thursday.

SDR is an international reserve asset created by IMF to supplement its member countries’ official foreign exchange reserves. The international financial institution had in August approved by far the largest allocation of SDR 456.5 billion – equivalent to about $650 billion – to help countries cope with the impact of the Covid-19 pandemic.

SDR is not money, but countries can exchange SDRs for hard currencies with other IMF members.

Sitharaman said advanced economies that have large reserves of SDRs should help the needy countries by voluntarily deploying their SDR holdings.

Her statement was shared by the finance ministry’s Twitter handle on Friday.

At the meeting, Sitharaman said that since universal vaccination was key to stemming the spread of Covid-19, the issue of vaccine inequity must be addressed globally as stark differences had emerged in vaccination coverage of low-income countries and advanced countries. She noted that vaccine availability and economic recovery would go hand in hand, since greater equity in vaccine access and affordability would lead to faster exit from crisis towargds recovery and growth.

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