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IMF boosts Nigeria’s external reserves with $3.35bn allocation from SDR

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The International Monetary Fund (IMF) on Monday approved the allocation of $3.35 billion from the $650 billion Special Drawing Rights (SDRs) to Nigeria.

The decision will lead to a 10 percent increase in Nigeria external reserves and provide the needed liquidity to help stabilized the Naira which has come under pressure in recent months.

SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.

The SDR is defined by the United States dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

The amount allocated to Nigeria is as a result of the exchange rate pegged at 0.702283 SDR to a dollar as of July 1 and Nigeria has 2.4545 billion SDRs.

The IMF Managing Director, Kristialina Georgieva, who spoke on the development, said: “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.

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“It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”

She said the general allocation of SDRs would become effective on August 23 and the newly created SDRs would be credited to IMF member countries in proportion to their existing quotas in the Fund.

The IMF chief stressed that about $275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income nations.

Georgieva promised that the Bretton Woods institution would continue to engage actively with its members to identify viable options for voluntary channeling of SDRs from wealthier to poorer, and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth.

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