The I.M.F. is distributing $650 billion to help poor countries fight the pandemic.

The I.M.F. is distributing $650 billion to help poor countries fight the pandemic.
By Alan Rappeport
The New York Times

The International Monetary Fund distributed $650 billion in emergency reserve funds on Monday to help poor countries combat the coronavirus pandemic and pay down debt.

The distribution was the largest such expansion of currency reserves, known as Special Drawing Rights, in the I.M.F.’s history. The world is grappling with a two-track economic recovery, with poorer countries lagging behind in vaccinating their populations and experiencing slower growth, and the Delta variant of the virus is leading to a rise in cases.

“The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis,” Kristalina Georgieva, the I.M.F.’s managing director, said in a statement.

A Special Drawing Right is essentially a line of credit that allows member countries of the I.M.F. to cash it in for hard currency. Its value is based on a basket of international currencies and is reset every five years. Each of the 190 I.M.F. countries gets an allotment of the currency reserves based on its shares in the fund, which tracks with the size of a country’s economy.

The currency reserves have been the subject of controversy within the United States in recent weeks, with Republican lawmakers accusing the Biden administration of enriching American adversaries such as China, Russia and Iran by backing the allocation. Other countries also expressed some concern last week after the Taliban toppled Afghanistan’s government and, under pressure from its members, the I.M.F. suspended the distribution of more than $400 million worth of S.D.R.s that Afghanistan was expected to receive.

The Treasury Department backed the allocation, and Treasury Secretary Janet L. Yellen had said the United States would not engage in S.D.R. transactions with adversaries such as Russia and Iran, making it unlikely that they would receive much of a benefit from the additional currency reserves.

Countries could exchange their S.D.R.s for other currencies, however, and there are no restrictions on how the money is used.

Through the allocation, Russia is receiving $17.6 billion of the reserve funds, Iran gets $4.8 billion and Syria gets $390 million, according to a tabulation by Jubilee USA, an organization that supports poverty reduction.

The fact that Afghanistan and Venezuela will not have access to the reserve funds because of doubts among I.M.F. members about the legitimacy of their governments raised new questions on Monday about whether the United States, the largest I.M.F. shareholder, should be pressuring the fund to block other countries from receiving billions of dollars’ worth of S.D.R.s.

Representative French Hill, an Arkansas Republican, said on Monday that the Treasury Department should have pressured the I.M.F. to suspend distribution of reserve funds to Belarus, Russia and Syria.

“They chose not to,” Mr. Hill said on Twitter, adding that the process needs to be reformed.

The I.M.F. said on Monday that as a result of the new distribution, $275 billion was going to emerging and developing countries. It is encouraging wealthy countries to voluntarily channel some of their reserve assets to those that are most in need.

Mindful of concerns, the I.M.F. said it would produce regular transaction reports on how the funds are being used.

Keep In Touch

Please sign up below to receive my weekly newsletter and get the latest news and updates directly to your inbox.