Argentina is among the countries that will receive the most income from the IMF depending on the level of reserves

Due to the quota of representation at the IMF, the most developed countries will receive proportionately more resources, for a total of $ 399,000 million, while they are currently the least needy, in the midst of the crisis triggered by the global coronavirus. pandemic.

In the ranking of countries that will receive the most funds based on their current international reserves, Zambia (112%) comes first; in second place Venezuela (79.6%), followed by the countries of Africa, Eastern Europe and Latin America (Nicaragua, El Salvador and Ecuador, in addition to Argentina).

Brazil will receive more than Argentina, estimated at $ 15 billion, or the equivalent of 4.3% of its international reserves.

Goldman Sachs senior analyst Alberto Ramos said the level of resources Argentina will receive “would represent a significant 10% increase in gross reserves, (and a more than 50% increase in the stock of unusable reserves). net international) “, he said.

In this sense, this line of funds “would greatly contribute to meeting the expected payment of debt service in SDRs to the IMF during the second half of 2021”.

According to Ramos, “the forthcoming SDR allocation and the recent Paris Club agreement provide a valuable bridge until the authorities agree on a medium-term macro-financial program with the IMF (probably only after the elections of mid-term in November) that it would allow the country to reschedule the fund’s large debt repayments in 2022-24, ”he said.

In contrast, in the region, it has been analyzed that the historical IMF allocation is “for a series of high-risk loans and from struggling emerging markets with low reserves and / or facing external financing needs. demanding, especially Argentina, Ecuador and El Salvador in Latin America; additional reserves could make a significant difference in the short term by easing the constraining external liquidity constraints, ”the report said.

Thus, the new SDR allocation “may help smooth out the necessary macroeconomic adjustment and avoid distorting policies, while leaving room for spending in response to the crisis, but it is in no way a material substitute for policy. sound and disciplined macroeconomic policy, ”Ramos said.

In addition, in order to address the persistent problem that most SDR reserves are allocated to countries that do not need them or use them immediately, the IMF is working to establish a trust fund to which countries with a strong financial position can voluntarily channel part of their SDRs. attributions.

This fund, which would be called Resilience and Sustainability, is still under development.

“If advanced economies made available 15% of their SDR allocation, EMDCs (emerging and developing) could raise an additional $ 60 billion,” Goldman Sachs estimated.

On another note, Goldman Sachas’s research team analyzed that the allocation of SDRs does not increase the global money supply and therefore does not generate inflation.

“Inflationary fears have been at the center of the global macroeconomic debate, but the allocation of SDRs is unlikely to be inflationary,” they said.

The technicality of the SDRs is that for the countries which receive them “it is not money that comes out of the helicopter”, they added with reference to the economist theorist Milton Friedman.

Indeed, it will increase the stock of world reserves, but (initially) not the world money supply, they estimated.

“At $ 650 billion, the total size of the overall SDR allocation is equivalent to just 0.7% of the projected world GDP for 2021 of $ 94 trillion and about 4% of central bank money base.” , they expressed.

In conclusion, as a “first-order proxy, the new allocation is not inflationary. However, in a few places higher reserves could support expansionary fiscal policies,” they noted. –