VENICE, Italy — The International Monetary Fund said on Friday that its executive board approved a plan to issue $650 billion worth of reserve funds, essentially creating money that troubled countries can use to purchase vaccines, finance health care and pay down debt.
The new allocation of so-called Special Drawing Rights would be the largest such expansion of currency reserves in the I.M.F.’s history. If given final approval by the I.M.F.’s board of governors, as is expected, the reserves could become available by the end of next month.
“This is a shot in the arm for the world,” Kristalina Georgieva, managing director of the I.M.F., said in a statement. “The S.D.R. allocation will help every I.M.F. member country — particularly vulnerable countries — and strengthen their response to the Covid-19 crisis.”
Ms. Georgieva made the announcement as finance ministers and central bank governors of the Group of 20 nations were gathering in Venice to discuss international tax reform, climate change and the global economic response to the pandemic. The I.M.F. has warned of a two-track economic recovery, with poor countries being left behind while advanced economies experience rapid expansions.
The support from the United States for the expansion of the I.M.F. reserves is another instance of the Biden administration reversing a Trump administration policy, and it is one that could have political implications in Washington. Republicans have accused Democrats of bolstering the fortunes of adversaries like China and Russia while doing little to actually help developing nations. And when the midterm political season gets into swing next year, “special drawing rights” could emerge as an unlikely talking point.
The I.M.F.’s member countries have been considering using its coffers of S.D.R.s by the equivalent of $650 billion to help poor countries access money to combat the public health crisis.
Last year the United States, under the Trump administration, balked at the proposal and prevented it from moving forward. It argued at the time that boosting the emergency reserves was an inefficient way to provide aid to poor countries and that doing so would provide more resources to advanced economies that do not need the help, like China and Russia.
But under Treasury Secretary Janet L. Yellen, the United States has taken a different view and now supports the allocation. Ms. Yellen believes that rich countries will have little use for the S.D.R.s but that developing economies will be able to use them to access enough money to vaccinate their people.