Officials from the International Monetary Fund stated in July that a fresh issuance of SDR reserves was one of the alternatives available to assist nations dealing with the consequences of Russia’s war in Ukraine, but there were no ongoing conversations at the time.
The World Bank stated on Wednesday that by 2030, over 600 million people will still be living in severe poverty on an income of only $2.15 per day, up from its previous warning last month about the rising dangers of a global recession due to the war.
The institutions’ request for a second significant SDR issuance comes just over a year before international financial leaders gather in Washington for the World Bank and IMF’s annual meetings.
Similar requests have recently been made by legislators and business organisations, however detractors claim the new version will also give Russia, which is still an IMF member, new assets.
Russian drawing rights will be difficult to swap for tangible cash from any nation, according to supporters.
The Center for Global Development’s Mark Blunt, a former IMF official, predicted that it would be challenging to obtain the required 85 percent consent for another allocation given the G20’s severe disappointment over failing to recycle $100 billion in drawing rights from the previous operation.
The International Monetary Fund was established in August 2021 and distributed $650 billion in SDR assets to member nations to aid with their COVID-19 epidemic recovery; however, poor countries are now seeking more money due to excessive inflation and a growing debt problem.
Organizations want the IMF to provide further emergency funding.
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