to boost reserve, support growth and covid-19 vaccines
By Othello B. Garblah
Liberia is expected to bag a whopping sum of US$350 million of IMF (International Monetary Fund) money that is if a proposal for general allocation submitted by the IMF Managing Director Kristalina Georgieva is approved.
IMF Managing Director Kristalina Georgieva submitted a proposal for a general allocation of Special Drawing Rights (SDRs) equivalent to US$650 billion to the Board of Governors for its approval on Friday, July 9.
If approved, Liberia would get US$350 based on its 0.05% quota to the IMF and the money would be used to boost its reserve, support economic growth, and the fight against covid-19 thru vaccines.
The proposal makes a case for an allocation of US$650 billion (about SDR 456 billion), based on an assessment of IMF member countries’ long-term global reserve needs.
It also includes measures to enhance the transparency and accountability in the reporting and use of SDRs while preserving the reserve asset characteristic of the SDR.
The general allocation would help many EMDCs that are liquidity constrained smooth needed adjustment and avoid distortionary policies while providing scope for spending on crisis response and vaccines.
The proposal by the IMF Managing Director follows the Executive Board discussion of the general allocation of SDRs on June 25 and its formal support of the proposal on July 8.
On June 25, the Executive Board discussed a proposal for a historic US$650 billion general allocation of SDRs to address the long-term global need to supplement existing reserve assets.
Approval of the general allocation of SDRs requires support by members representing an 85 percent majority of the total voting power of SDR Department participants (currently all IMF members).
The Board of Governors is scheduled to vote on the proposal by August 2. Once approved, the allocation is expected to be implemented by end-August (during the current Eleventh Basic Period).
Liberia’s usage of fund if approve
If approved Liberia is expected to use the US$350 million for three purposes: to boost up Liberia reserve. This is one of the main reasons for which the allocation has been made; to support economic growth thru major infrastructure investment t in the post COVID Era and to support Fight against COVID thru vaccinations and; to liquidate both domestic debt as a form of economic stimulus and to pay down some debt to the IMF.
The Liberian Government led by the Ministry of Finance Development Planning will also be expected to negotiate with the IMF for the usage of the money.
The funding amount would be given to the Central Bank of Liberia and the non-reserve portion on-lent to the fiscal authority.
Key dates about Liberia and the IMF
Liberia join the IMF on March 2, 1962
It has a SDR quota of 25.4 million.
Special Drawing Rights of 136.9 million.
The Articles of Agreement require periodic consideration and decisions on SDR allocations or cancellations in consecutive basic periods of normally five years. The Managing Director must make a proposal to the Board of Governors no later than six months before the end of each basic period regarding a general allocation or cancellation for the next basic period if the conditions under the Articles are met. If there is no proposal for an allocation (or cancellation) at that point, the Managing Director can bring the issue of a general allocation or cancellation of SDRs before the Executive Board for further discussion, if and when appropriate, during the course of the basic period. The Board of Governors or the Executive Board may also request that the Managing Director make proposals at any time. The current Eleventh Basic Period is scheduled to end on December 31, 2021, and the Twelfth Basic Period will commence on January 1, 2022.https://www.imf.org/en/News/Articles/2021/07/12/pr21213-imf-md-kristalina-georgieva-proposal-gen-allocation-sdrs-equiv-650b-board-governors-approval