IMF earmarks Romania 1.4bln dlrs in SDR programmes

Romania will get 908.8 million SDR (roughly 1.4 billion dollars) to supplement its forex reserves, as the International Monetary Fund (IMF) decided on Friday, Aug. 28 to boost the member states’ reserves by allocating Special Drawing Rights worth the equivalent of about 250 billion dollars, the international lender said on its Web site.

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies (the dollar, British pound, Japanese yen and euro), and SDRs can be exchanged for freely usable currencies.

The IMF will implement on Sept. 9 a special allocation of about 33 billion dollars, with the total amount to go up to 283 billion dollars.

The SDR allocation will boost the IMF member states’ reserves as it can be changed into various currencies such as the dollar, euro, yen or British pound by voluntary commercial agreements with other IMF members.

The equivalent of nearly 100 billion dollars of the money allocated by the IMF on Friday will go to emerging markets and developing countries, and over 20 billion dollars to low-income countries.

For these countries, the SDR allocation gives them potential access to the unconditional financial resources that can limit the need of adjustments by contracting policies and allow a greater freedom for the stabilization policies amid the recession and rising unemployment, the IMF said.

The SDR allocation is a key part of our response to the global crisis and it is a prime example of the quick multilateral response to the financial crisis.

The low-income IMF countries will significantly benefit from the SDR allocation, said Caroline Atkinson, Director of the External Relations Department at the IMF.

Romania has agreed a two-year loan with the IMF worth 12.95 billion euros, with the total outside financing package including the money from the IMF, the European Union, the World Bank and the European Bank for Reconstruction and Development totalling 19.95 billion euros.

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