The International Monetary Fund has increased its lending capacity to $650 billion. This is the largest sum that the IMF has had at its disposal to provide financial assistance.
On August 02, the Fund’s Board of Governors approved a general allocation of Special Drawing Rights equivalent to $650 billion. This should become effective as from August 23. As from this date, much needed financial assistance will be credited to member countries in proportion to their existing quotas.
About $275 billion will be made available to help low-income countries to support and plan their post-pandemic recovery. $33 billion will be destined to low-income African countries.
According to Kristalina Georgieva, IMF Managing Director, “this is a historic decision – the largest SDR allocation in history of the IMF and a shot in the arm of the global economy at a time of unprecedented crisis”.
Will Mauritius benefit? The objective of the Fund in increasing its lending capacity is to help countries address long-term needs for reserves and build confidence. The Fund seeks to give priority to countries that are struggling to cope with the impact of the COVID-19 crisis.
Although Mauritius enjoys the status of upper-middle-income country, as an economy that is heavily dependent on tourism flows, it falls in the category of countries vulnerable to the crisis. Under the new facilities, Mauritius can lobby countries like France who can choose to whom to provide the $24 billion that will be at its disposal.
