KUALA LUMPUR, Sept 7 – The international reserves of Bank Negara Malaysia amounted to US$116.3 billion
as at 30 August 2021.
The higher reserves level mainly reflect an additional allocation of Special Drawing Rights (SDR) to Malaysia of SDR3.5 billion, equivalent to US$5.0 billion, by the International Monetary Fund (IMF), a statement from the central bank said today.
The SDR allocation will provide additional liquidity to the global financial system, bolster reserves, build
confidence, and enhance the resilience of the world economy, it said.
The reserves position is sufficient to finance 8.3 months of retained imports and is 1.3 times total
short-term external debt.
Meanwhile, information on the IMF website describes the SDR as an interest-bearing international reserve asset created by the IMF in 1969 to supplement other reserve assets of member countries.
An SDR allocation is a way of supplementing Fund member countries’ foreign exchange reserves, allowing members to reduce their reliance on more expensive domestic or external debt for building reserves.
On August 23, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) announced the SDR allocation, saying it was the largest in history—about US$650 billion.
She said the allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat the unprecedented crisis of Covid-19.
“The SDR allocation will provide additional liquidity to the global economic system – supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt. Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the crisis.”