The governing body of the International Monetary Fund, IMF, has approved a US$650-billion expansion in the agency’s resources to support economically vulnerable countries battling the coronavirus pandemic and the economic downturn it has caused.

The 190-nation lending institution said on Monday that its board of governors approved the expansion of its reserves, known as Special Drawing Rights, the largest increase in the institution’s history.

“This is a historic decision ... and a shot in the arm for the global economy at a time of unprecedented crisis,” IMF Managing Director Kristalina Georgieva said. “It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”

The general allocation of SDRs will become effective on August 23. The IMF said that the new reserves will be credited to IMF member countries in proportion to their existing quotas with the agency. About US$275 billion of the new allocation will go to the world’s poorer countries.

The agency is also looking into ways richer countries could voluntarily channel SDRs to poorer countries, the agency said.

The big boost in IMF resources had been rejected by the Trump administration. But after US President Joe Biden took office in January, his Treasury Secretary, Janet Yellen, threw her support behind the proposal.

Many Republican members of Congress objected to the SDR increase, saying that the expanded IMF resources would benefit United States adversaries, such as China, Russia and Iran. However, the increase in resources was strongly supported by international relief agencies.

AP