Algeria increases its IMF SDR quota by over 705 million

Algérie Presse Service (APS) - October 17, 2012
ALGIERS - Algeria has increased its Special Drawing Rights (SDR) quota in the International Monetary Fund (IMF) by over 705 million SDRs (equivalent to more than one billion dollars), thus increasing its quota from 1.25 billion SDRs (about $1.9 billion) to1.96 billion SDRs (close to $3 billion), according to a presidential decree published in the Official Gazette (Journal Officiel.)

Algeria has authorized, the decree said, the increase of its quota within the IMF by over 705 million SDRs to reach 1.959 billion SDRs (Special Drawing Rights.)

This decision thus implements the quota increase by IMF member countries reached at the 14th general review in December 2010, which had ratified a twofold increase of the international financial institution's contributions from 238.4 billion SDRs to about 476.8 billion SDRs (about $750 billion.)

This measure is being implemented in addition to the recent decision by Algeria to contribute $5 billion to the lending request floated by the IMF.

Algeria's participation in the lending will be conducted under the form of purchase of SDR-denominated securities, indicated a statement released last Oct. 11 by the Ministry of Finance and the Bank of Algeria.
Algeria's participation in the lending benefiting the IMF is an operation that is "part of rational management of the country's foreign currency reserves," the statement indicated further.

The operation is "a good opportunity" for Algeria to diversify its investment portfolio under two requirements." The first consideration is the quality of the borrower, and, therefore, the financial instrument, with the IMF being a multilateral financial institution of the first order, thus providing "a high level of security for investments."

The second consideration is currency denomination, since the bonds considered for this loan are SDR-denominated securities, thus expanding the foreign currency array of exchange reserves, "which will further alleviate underlying exchange risks," the same source had noted.

IMF member countries' quotas are subject to review every five years.
Special Drawing rights (SDR) is an international reserve asset created in 1969 by the IMF to complement the official exchange reserves of its member countries. Its value is based on a basket of four major currencies.