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How to Use the SDR

Summary:
With governments in need of new options to shore up national economies during the COVID-19 lockdown, an older but potentially more powerful mechanism is already available. If deployed in the right way, the IMF's international reserve asset could mobilize substantial capital at effectively no cost. LONDON – Owing to the COVID-19 pandemic, the International Monetary Fund estimates that, between now and the end of 2021, global GDP will suffer a cumulative loss of more than trillion – a figure greater than the size of the Japanese and German economies combined. While the ultimate solution to the crisis will depend on the development and widespread deployment of diagnostics, treatments, and eventually a vaccine, there

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With governments in need of new options to shore up national economies during the COVID-19 lockdown, an older but potentially more powerful mechanism is already available. If deployed in the right way, the IMF's international reserve asset could mobilize substantial capital at effectively no cost.

LONDON – Owing to the COVID-19 pandemic, the International Monetary Fund estimates that, between now and the end of 2021, global GDP will suffer a cumulative loss of more than $9 trillion – a figure greater than the size of the Japanese and German economies combined. While the ultimate solution to the crisis will depend on the development and widespread deployment of diagnostics, treatments, and eventually a vaccine, there has also been a proliferation of proposals for containing the pandemic’s economic fallout.

With governments intervening on a massive scale, debt is expected to rise to unprecedented levels in some countries. Italy’s debt-to-GDP ratio, for example, is projected to increase by at least 20 percentage points, to over 155%, by the end of the year. Along similar lines, other countries severely hit by the pandemic, like France and Spain, will also experience a sizable spike in their debt-to-GDP ratios. And many developing countries will find...

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