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Germany expects deal on new IMF reserves to help poorest countries in pandemic

FILE PHOTO: International Monetary Fund logo is seen outside the headquarters building during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas/File Photo

BERLIN (Reuters) - Germany expects world financial leaders this week to back a $650 billion new allocation of the International Monetary Fund’s Special Drawing Rights (SDR) to help countries cope with the pandemic and its economic fallout, officials said on Tuesday.

“That is a reasonable figure,” a senior German finance ministry official said ahead of the virtual spring meetings of the International Monetary Fund and World Bank.

With the new U.S. administration backing the move, there is now broad agreement among IMF members to bolster the Fund’s emergency reserves and a deal this week will pave the way for the fresh money being available from August, the official said.

The new allocation will benefit countries struggling most from the pandemic as roughly 42% of the new funds will go to the world’s poorest countries, the official added.

Vaccination rates and economic development are diverging widely across the globe so the move to bolster IMF’s emergency reserves is meant to reduce the recovery gap between rich and poor countries.

Reporting by Michael Nienaber; Editing by Madeline Chambers