The Mozambican government will receive 216 million units of Special Drawing Rights (SDR), about 261 million euros, according to the distribution proportional to its quota in the International Monetary Fund (IMF).
According to the document that was approved by the IMF board of directors and that will begin today to strengthen the foreign reserves of all members of the Fund, Mozambique will receive 216 million units of SDRs, equivalent to US$305.9 million at the current exchange rate.
“The proposal advocates an allocation of US$650 billion, around SDR 456 billion, based on an assessment of the long-term reserve needs of member states, and includes measures to increase transparency and accountability in reporting the use of SDRs, while preserving the characteristics of SDRs,” reads a technical note from the IMF on the issue, which will begin today.
The note goes on to say that “the allocation will help many member states smooth the need to adjust in the face of liquidity constraints and avoid unbalanced policies, while providing room for increased spending on crisis response and vaccines.”
Developing countries and emerging markets will receive $275 billion of the total, IMF Managing Director Kristalina Goergieva said on 2 August at the Fund’s board approval of the issuance.
Member countries began discussing a DES issuance as early as last year due to the impact of the covid-19 pandemic, which threw the global economy into a 3.5 per cent recession and is expected to grow by 6 per cent this year, according to forecasts made in the latest World Economic Outlook report.
The issuing of SDRs is an instrument created by the IMF to provide liquidity and increase the available resources of states with financial needs, acting as a kind of IMF capital increase to reinforce the fight against the pandemic and relaunch economic growth.
A DES is a unit in which the US dollar has 41.73% of the peso, the euro 30.93%, the Chinese yuan 10.92%, the Japanese yen 8.33% and the pound sterling 8.09%, and is quoted daily by the IMF.
Angola is the Lusophone African country that will have the most robust allocation, followed by Mozambique, with 261 million euros, Equatorial Guinea (181.6 million euros), Guinea-Bissau, with 32.6 million, Cape Verde, with 27.8 million, and Sao Tome and Principe, which will receive almost 17 million euros in foreign exchange reserves.
In total, Portuguese-speaking African Countries (PALOP) will receive a reinforcement of EUR 1,372.2 million, corresponding to 1,134 million units of SDRs.
The issuing of SDRs will help countries in greater difficulty to balance their accounts and strengthen the commitment to combat the spread of the pandemic, and has been described by African countries as essential to revive economic growth in the region.
African countries, particularly those in sub-Saharan Africa, have argued that their share of the DES is disproportionately lower than their needs due to the small quota in the IMF, highlighting the low vaccination rate and the need to maintain the financing of projects with capacity to strengthen infrastructure and thus ensure the attractiveness of new investments that make the region grow.
The IMF has argued that the more advanced countries, which are less in need of this ‘injection of capital’, should transfer part of the strengthening of their SDRs to developing countries, and the main powers have agreed to channel at least US$100 billion to the countries with the most difficulties.
