IMF board backs $650 bn reserves distribution, targets end-Aug completion

G20 members to back carbon pricing role for the first time in the climate fight

The International Monetary Fund said on Friday its executive board has backed a $650 billion allocation of IMF Special Drawing Rights, advancing the distribution of currency reserves to the IMF’s 190 member countries towards a targeted completion by the end of August. This, even as G20 finance ministers are set to urge the IMF to quickly come up with ways for countries to steer its resources.

IMF Managing Director Kristalina Georgieva said she will now present the SDR allocation proposal, the largest in the Fund’s 77-year history, to its Board of Governors, with representatives from every IMF country.

“This is a shot in the arm for the world,” Georgieva said, ahead of a G20 finance ministers and central bank governors meeting in Venice. “The SDR allocation will boost the liquidity and reserves of all our member countries, build confidence, and foster the resilience and stability of the global economy.”

The Fund also wants G20 countries to decide on a clear path over the next two days for allowing rich nations to contribute $100 billion worth of newly issued IMF reserves to poorer countries, IMF First Deputy Managing Director Geoffrey Okamoto said.

The G20 statement — which two sources said is expected to be released on Saturday without changes, after the Venice meeeting — is set to say: “To significantly magnify the impact of the allocation, we call on the IMF to quickly present actionable options for countries to voluntarily channel a share of their allocated SDRs to help vulnerable countries... We call for contributions from all countries able to do so to reach an ambitious target.”

G20 finance ministers would also assert that economic support measures must be in line with central banks' commitments to keep inflation stable. Besides, the finance chiefs of the G20 club have backed a landmark move to stop multinationals shifting profits into low-tax havens and win back hundreds of billions of dollars in lost revenues, a draft communique showed. The aim is to give it a final blessing at the Rome summit in October.

Indian Finance Minister Nirmala Sitharaman emphasised on the role of technology in fighting climate change and called for international cooperation to increase supply of alternative sources of energy and technologies. She highlighted that in India, fiscal policy options are used for better environmental outcomes and concessional tax rates are in place to promote renewables.

The finance ministers will for the first time recognise the role of carbon pricing as part of efforts to tackle climate change, according to sources. But the communique will stop short of calling for net zero emissions by 2050.