G7 finance ministers agreed to support a new and significant IMF Special Drawing Rights (SDR) allocation – an asset issued by the IMF to increase members’ reserves and provide liquidity to vulnerable countries, freeing up resources to meet critical needs such as vaccines and food imports and improve buffers in emerging markets and low-income countries.
This important step lays the groundwork for eventual approval at the G20 and IMFC meetings to be held at the forthcoming IMF and World Bank spring meetings in April. The last allocation of SDRs took place following the financial crisis of 2009.
Speaking after the UK Presidency’s second G7 finance ministers’ meeting (Friday, March 19), Chancellor of the Exchequer Rishi Sunak said:
Today’s historic agreement between the G7 paves the way for crucial and concerted action to support the world’s low-income countries, ensuring that no country is left behind in the global economic recovery from the coronavirus.
As part of the discussions on SDRs, it was agreed that the G7 would work with the IMF to make progress in improving transparency and accountability regarding the use of SDRs and to explore how countries could voluntarily recycle their assets. in SDRs to further support low-income countries. The G7 agreed that the IMF should separately develop some options on how this could be done, without delaying agreement on a new general allocation.
Presiding over the meeting, Chancellor Rishi Sunak also commended the continued cooperation among G7 finance ministers to prioritize climate change and environmental issues in their main economic agendas, and noted the continued commitment of G7 counterparts to find a sustainable multilateral solution to the fiscal challenges of digital technology. economy, thanks to close cooperation between the G7, the G20 and the OECD.
the new allocation is subject to the IMF’s analysis of aggregate reserve requirements which will be presented before any formal agreement
there have been four previous allocations of SDRs: in 1970-72; 1979-81; and two in 2009, for a total of $ 293 billion allocated to date
the G7 includes UK, Canada, France, Germany, Italy, Japan, US and EU
more information about the IMF can be found here