IMF allocates $6.4 billion in special drawing rights to Turkey

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The International Monetary Fund’s (IMF) recent special drawing rights (SDR) program gave Turkey’s foreign currency reserves a $6.4 billion boost on Monday.

The SDRs, an international reserve asset that can be converted into the dollar, euro, yen, British pound and yuan, will increase Turkey’s gross reserves but won’t affect its net international reserves.

The SDRs in question will be delivered to all IMF members based on their quotas without any condition, as the IMF board recently approved a general allocation of Special Drawing Rights (SDRs) equivalent to $650 billion. Turkey has a 0.98 percent quota in the IMF.

The Turkish central bank already has around $1.5 billion worth of SDRs in its accounts, delivered after the 2008 financial crisis.

As of August 6, the central bank’s gross reserves stood at $109 billion, net reserves stood at $25.2 billion and net reserves when swaps are excluded stood at minus $41.2 billion.

Opposition parties criticize President Recep Tayyip Erdoğan’s government for the aggressive sale of the central bank’s foreign currency reserves in 2019 and 2020 in a futile effort to boost the ailing lira without resorting to rate increases.

Erdoğan is a strong opponent of high interest rates and once called them the “mother and father of all evil.”

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