WASHINGTON: US Treasury Secretary Janet Yellen on Wednesday defended the IMF’s move to increase its reserve offerings, calling the increased aid a “joint effort” to help the poorest nations hit by Covid-19.

IMF Managing Director Kristalina Georgieva on Tuesday said the fund wants to increase its allocation of special drawings rights (SDR) by $650 billion with the aim of safeguarding the financial health of impoverished countries.

Yellen defended the raise in response to questions from lawmakers on the Senate Banking Committee who were concerned the money would aid rich countries that don’t need it, including Washington’s rivals.

“I would say that the current crisis has increased the need for global reserves, and that’s the IMF’s assessment. The global economy suffered a very severe, severe collapse in 2020,” Yellen said in testimony alongside Federal Reserve Chair Jerome Powell.

“This allocation will help countries meet this need for reserves.”

Yellen added that many countries intend to forgo their SDR increase in favor of poor countries, which would magnify the impact of the new allocations.