IMF earns $14.5 billion as interest on SDR allocations to member countries
The International Monetary Fund (IMF) at the end of the second quarter of this year made earnings of some $14.5 billion in interests on Special Drawing Rights (SDR) allocations made to member countries.
An examination of the Fund’s Quarterly Report on IMF Finances by norvanreports, indicate that a total of 204 billion SDR allocations were made by the end of June 2021 at the interest rate of 0.05 percent and exchange rate of $1.43.
The 204 billion allocation, the Bretton Wood institution notes includes some 182.6 billion SDR allocations made in 2009 amid the global financial crisis.
“As of July 2021, SDR 204.2 billion have been allocated, including SDR 182.6 billion allocated in 2009 in the wake of the global financial crisis,” said the IMF.
Aside the SDR allocations made, member countries holding of SDR at the end of the reporting month totaled 180.3 billion SDR with the prescribed SDR holdings by member countries being 2.3 billion SDR.
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. SDRs are allocated to participants in the SDR
Department, all of whom are also members of the IMF.
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The SDR allocations can play a role in providing liquidity and supplementing member countries’ official reserves, as was the case with the 2009 allocations due to the global financial crises and is also the case this year amid the Covid-19 pandemic as the Fund has made a historic allocation of 456 billion SDR ($650 billion).
The value of the SDR is based on a basket of five currencies—the Chinese renminbi, the Euro, the Japanese yen, the Pound sterling, and the U.S. dollar.
SDR allocation is a form of concessional loan provided by the IMF to member countries hence the below market interest rate of 0.05 percent and the long-dated loan repayment periods.
Presently, Ghana’s SDR holdings with the IMF according to the Bank of Ghana’s Statistical Bulletin for June 2021 stands at Ghs 182 million ($31.62 million). This is after a decline of some Ghs 100 million from Ghs 282 million ($49.21 million) in May 2021.
