Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the effect of on-lending 50 per cent of the UK’s most recent allocation of Special Drawing Rights, through IMF established re-channelling vehicles, on his annual fiscal policies.

The UK is a leading global advocate of Special Drawing Rights (SDR) channelling, and has committed to an ambitious channelling envelope of 4bn from the SDRs received through the 2021 General Allocation, which took place under the UK’s G7 Presidency. Within this SDR 4bn, the government has already committed 3.5bn SDRs to IMF lending instruments, namely the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust. The UK’s pledge to re-channel 20% of new SDRs is in accordance with the principle of fair burden sharing across all countries with strong external positions and has been pivotal in mobilising further commitments.

The UK’s SDRs are held as part of the Government’s reserves in the Exchange Equalisation Account (EEA). Reserves in the EEA have clearly defined functions as set out in the EEA Act 1979, and the government considers the current size of the reserves appropriate to meeting these.