Philippines to get billions of dollars worth of SDRs under new IMF allocation

The Philippines is set to receive billions of dollars worth of Special Drawing Rights (SDRs) from the International Monetary Fund (IMF), as approved by the Board of Governors earlier this week.

The IMF on August 2 approved a general allocation of $650 billion which will be credited to IMF member countries in proportion to their existing quotas in the fund.

According to IMF Managing Director Kristaline Geogieva, the latest SDR allocation is the largest in the history of the IMF, amid the COVID-19 pandemic.

“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy,” Georgieva said.

“It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” she added.

SDRs are international reserve assets created by the IMF to supplement the official reserves of member countries. It is a potential claim on usable currencies which could boost a country’s liquidity.

The IMF said the general allocation of the SDRs will take effect on August 23, 2021, with about $275 billion going to emerging markets and developing countries, including low-income territories.

“We will also continue to engage actively with our membership to identify viable options for voluntarily channeling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth,” said Georgieva.

According to the Oxfam International, the new SDR allocation could translate to $2.79 billion for the Philippines, based on the 0.43% quota share of the country.

“New SDRs will bring much-needed liquidity to struggling developing countries without adding to their unsustainable debt burdens,” Oxfam International Washington DC Office Head Nadia Daar said in a separate statement.

“Now that this historic SDR issuance has been approved, governments must work transparently and together with civil society to ensure these resources are used to rescue collapsing health services and bolster social protection, and to deliver a fair and climate just recovery,” Daar added.

The Department of Budget and Management (DBM) earlier this week said the 2022 budget will focus on sustaining the government’s response to the COVID-19 pandemic, through the procurement of the necessary equipment.

Finance Secretary Carlos Dominguez III last month said the Philippines has enough funds for its COVID-19 war chest even after the term of President Rodrigo Duterte ends next year.—LDF, GMA News