Special Drawing Rights: IMF

Context

The International Monetary Fund (IMF) has made an allocation of special drawing rights (SDR) 12.57 billion (equivalent to around $17.86 billion at the latest exchange rate) to India.

• Now, the total SDR holdings of India stand at SDR 13.66 billion.

 What are Special Drawing Rights?

• Special drawing rights (SDR) are an artificial currency instrument created by the International Monetary Fund, which uses them for internal accounting purposes.
• SDR is an interest-bearing international reserve asset created by the IMF in 1969 to supplement other reserve assets of member countries.
• SDRs are only allocated to IMF members that elect to participate in the SDR Department. 
  • Currently all members of the IMF are participants in the SDR Department.
• SDR is often regarded as a 'basket of national currencies' comprising four major currencies of the world - 
• • • US dollar
    • Euro
    • British Pound
    • Yen (Japan)
    • Chinese Renminbi
• The SDR currency value is calculated daily (except on IMF holidays or whenever the IMF is closed for business).
• The valuation basket is reviewed and adjusted every five years.
• India's foreign exchange reserves also incorporate SDR other than gold reserves, foreign currency assets and Reserve Tranche in the IMF.
• India's current quota in the IMF is SDR (Special Drawing Rights) 5,821.5 million, making it the 13th largest quota holding country at IMF and giving it shareholdings of 2.44%.

International Monetary Fund (IMF)

• The IMF was originally created in 1945 as part of the Bretton Woods Agreement.
• The IMF also acted as a gatekeeper.
• The IMF is governed by and accountable to the 190 countries that make up its near-global membership.
• India joined in December 1945.
• The IMF's primary purpose is to ensure the stability of the international monetary system — the system of exchange rates and international payments that enable countries (and their citizens) to transact with each other.
  

• • Its mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.

Reports by IMF

• Global Financial Stability Report-The Global Financial Stability Report provides an assessment of the global financial system and markets, and addresses emerging market financing in a global context.
• World Economic Outlook is accompanied by lengthy discussions on the effect of fiscal, monetary, and trade policies on growth prospects and financial stability.
  • India is now the world's 5th largest economy with an impressive 8.8 per cent growth rate in 2021,surpassing China's projected growth rate of 8.2 per cent.