Joel Julien

joel.julien@guardian.co.tt

Trinidad and To­ba­go’s net for­eign re­serves have got­ten a boost and now stand over US$7 bil­lion, Fi­nance Min­is­ter Colm Im­bert has an­nounced.

“T&T’s For­eign Re­serves have just been boost­ed by the equiv­a­lent of US$644 mil­lion, as a re­sult of a glob­al dis­tri­b­u­tion by the IMF of Spe­cial Draw­ing Rights de­signed to help coun­tries cope with the Forex de­mands of COVID-19. Our Net For­eign Re­serves are now back over US$7 bil­lion,” Im­bert tweet­ed yes­ter­day.

“The US$644M in ad­di­tion­al SDRs from the IMF gives the Gov­ern­ment more flex­i­bil­i­ty to in­ject USD in­to the com­mer­cial bank­ing sec­tor for dis­tri­b­u­tion to the pub­lic and to make more Forex avail­able through the Ex­im­Bank to the man­u­fac­tur­ing sec­tor and to im­porters of es­sen­tial goods,” he tweet­ed.

On Au­gust 2, the Board of Gov­er­nors of the IMF ap­proved a gen­er­al al­lo­ca­tion of SDRs equiv­a­lent to US$650 bil­lion (about SDR 456 bil­lion) to boost glob­al liq­uid­i­ty.

The SDR ex­change rate of ref­er­ence is 0.702283 SDR per USD as of Ju­ly 1, 2021 which was the date of Chair­man’s Sum­ming Up on the Ex­ec­u­tive Board dis­cus­sion of Pro­pos­al for a Gen­er­al Al­lo­ca­tion of Spe­cial Draw­ing Rights.

“This is a his­toric de­ci­sion­—the largest SDR al­lo­ca­tion in the his­to­ry of the IMF and a shot in the arm for the glob­al econ­o­my at a time of un­prece­dent­ed cri­sis. 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. It will par­tic­u­lar­ly help our most vul­ner­a­ble coun­tries strug­gling to cope with the im­pact of the COVID-19 cri­sis,” IMF man­ag­ing di­rec­tor Kristali­na Georgie­va stat­ed.

The gen­er­al al­lo­ca­tion of SDRs be­came ef­fec­tive on Mon­day.

The new­ly cre­at­ed SDRs will be cred­it­ed to IMF mem­ber coun­tries in pro­por­tion to their ex­ist­ing quo­tas in the Fund.

About US$275 bil­lion (about SDR 193 bil­lion) of the new al­lo­ca­tion will go to emerg­ing mar­kets and de­vel­op­ing coun­tries, in­clud­ing low-in­come coun­tries.

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

One key op­tion is for mem­bers that have strong ex­ter­nal po­si­tions to vol­un­tar­i­ly chan­nel part of their SDRs to scale up lend­ing for low-in­come coun­tries through the IMF’s Pover­ty Re­duc­tion and Growth Trust (PRGT), the IMF stat­ed.

Con­ces­sion­al sup­port through the PRGT is cur­rent­ly in­ter­est free. The IMF is al­so ex­plor­ing oth­er op­tions to help poor­er and more vul­ner­a­ble coun­tries in their re­cov­ery ef­forts. A new Re­silience and Sus­tain­abil­i­ty Trust could be con­sid­ered to fa­cil­i­tate more re­silient and sus­tain­able growth in the medi­um term.