© Reuters/YURI GRIPASFILE PHOTO: The IMF logo is seen outside the headquarters building in Washington
By Andrea Shalal
WASHINGTON (Reuters) - The staff of the International Monetary Fund has recommended a new allocation of $650 billion in the Fund's emergency reserves, or Special Drawing Rights, given a new assessment of global reserve needs, sources briefed on the issue said on Tuesday.
The IMF's executive board will discuss the recommendation later Tuesday, the sources said.
An assessment of global reserve needs, completed every five years, showed a clear need for additional SDRs as countries continue to grapple with the coronavirus pandemic, the sources said. No details of the assessment were immediately available.
The IMF had no immediate comment.
The staff recommendation comes after both the Group of Seven advanced economies and the larger Group of 20 major economies backed the first expansion of the IMF's reserves since 2009, a move long opposed by former President Donald Trump.
Global finance officials backed the exansion after U.S. Treasury Secretary Janet Yellen offered her qualified support while also demanding greater transparency about how the SDRs would be used and traded. U.S. support is critical since it is the largest shareholder in the global lender.
The staff recommendation paves the way for the U.S. Treasury to notify Congress about the expected IMF allocation.
No formal vote is required, but the plans have already drawn criticism from congressional Republicans, who worry the move would fail to target the countries most in need of the funds but would provide free reserves to China, Russia, Iran and other countries seen as U.S. adversaries.
In a statement last week, the Treasury said countries' financing needs would remain high and SDRs served as a stable reserve asset that offered advantages over borrowed assets.
Any expansion of SDRs must still be formally approved by the IMF board.
Eric LeCompte, a UN adviser and executive director of Jubilee USA Network, a non-profit that advocates for debt relief, welcomed the news. "This is incredible progress because now the clock starts," he said.
(Reporting by Andrea Shalal; Editing by Dan Grebler)