Minister Coye Special Drawing Rights for Financial Stability
In August, Belize benefited from an allocation of Special Drawing Rights, commonly known as SDRs worth around thirty-six million U.S. dollars by the International Monetary Fund. SDRs, which the IMF created in 1969, are not hard cash, but supplement our Foreign Exchange reserves to provide a country with liquidity without the need to borrow at high-interest rates. Essentially, SDRs play a crucial role in maintaining stability when traditional methods fall short. Minister of State in the Ministry of Finance, Chris Coye, shared with News Five on Monday that for the past week he has been meeting virtually with officials from the IMF as part of a discussion with other countries in the Caribbean. One of the areas that Coye says Belize can benefit from is through Special Drawing Rights, made available by bigger economies that don’t need their allocation.
Chris Coye, Minister of State, Finance
“In August of this year, the IMF – the Board of Governors of the IMF approved for the allocation of six hundred and fifty billion SDRs. Belize was the beneficiary of a small proportion of that which equates to roughly thirty-six million dollars U.S. or seventy-two million Belize. We got that in August, so we got that addition in effect to our Foreign Exchange Reserves, further supporting our currency peg. But this allocation was done proportionately, so you have like the U.S. as one of the member countries, they also get an allocation, but they don’t need reserves. I shouldn’t say that they don’t need reserves but they are one of the stronger countries so far as reserves are concerned. And you have other developed countries that don’t need, in effect, to have new allocations. So the SDR channeling is about those countries who are, on a voluntary basis, willing to make available those excess reserves, if you will, to be channeled for different purposes. And one of the purposes that the IMF is putting together is to develop what we call a Resiliency and Sustainability Trust and through that Trust they support countries to reduce the risk of balance of payments or difficulties with their balance of payments stability, whether by way of climate change or other pandemics, or otherwise. So that is one of those areas where we want to ensure that we would be eligible for access to that channel through that Trust. The IMF has already indicated that small states and vulnerable countries will be eligible, so that was a positive – that will take about a year to get fully formalized.”
On Wednesday, Minister Coye will meet virtually with an official of the World Bank to discuss, similarly, what considerations can be made for Belize. He said one of the points he intends to bring up falls under the Bank’s Small Island Exception Policy for consideration for funding.
