IMF general allocation expands Iceland’s international reserves
The International Monetary Fund (IMF) allocated special drawing rights (SDR) to its member countries on 23 August 2021, following prior approval by the Fund’s Board of Governors on 2 August. The Governor of the Central Bank of Iceland is a member of the Board of Governors. The general allocation, equivalent to a total of 650 billion US dollars, is distributed to member countries in direct proportion to their quota with the Fund. The quota reflects the countries’ share in the global economy and creates the foundation for the Fund’s lending capacity, as well as determining each country’s voting rights within the Board.
This SDR allocation, the largest in the history of the IMF, is partly a response to the economic hardship many countries have suffered because of the COVID-19 pandemic. The aim of the allocation is to improve countries’ access to liquidity, strengthen their international reserves, and mitigate the need to rely on more expensive domestic or foreign debt financing. Member countries will be able to use the increased space to support their economies and step up their fight against the pandemic.
Prior to this allocation, Iceland’s reserve holdings in SDR totalled SDR roughly 184 million. With the allocation, they have increased by SDR 308 million, to a total of SDR 492 million. This expands Iceland’s international reserves by approximately 55.4 b.kr., from 29% of GDP to 31% of GDP, and increases the share of SDRs in the reserves from 4% to 10%.
The IMF’s press release can be found here: IMF Managing Director Announces the US$650 billion SDR Allocation Comes into Effect
Press release no. 20/2021
27 August 2021