May 21 2021
9:00 am EDT / 15:00 CET
- What role can Special Drawing Rights (SDRs) play in global pandemic crisis response and recovery?
- How can SDR transfer mechanisms be designed to maximize impact for all countries that need support, while avoiding harm?
- Is there a role for global, regional and sub-regional development banks and/or new trust funds or vehicles in the mechanisms?
- What complementary policies and reforms could help, in the short and the long term?
ENGLISH-SPANISH-FRENCH-PORTUGUESE SIMULTANEOUS TRANSLATION WILL BE PROVIDED
SPECIAL DRAWING RIGHTS: SAVING THE GLOBALECONOMY AND BOLSTERING RECOVERY INPANDEMIC TIMES
As the coronavirus health, social and economic crisis hammers the worldeconomy, developing countries continue to bear the brunt of the impacts ongrowth, poverty and inequality. The uneven rollout of vaccines andappearance of new variants of the virus threaten to prolong the crisis.
Global reserve funds in the form of IMF SDRs are a vital tool to provide swiftand unconditional support to the global response without increasing debt.Civil society organizations and experts called for a new allocation of $3trillion in SDRs. The IMF membership conveyed broad support for anallocation of $650 billion in SDRs and will consider a formal proposal inJune. Of this amount, low-income countries would receive $21 billion –crucial relief, but not close to the $450 billion financing needs identified bythe IMF to step up pandemic response and accelerate growth. Developingcountries would receive $230 billion, short of IMF estimates that last yearplaced emerging economies’ financing needs at $2.5 trillion.
IMF membership also asked the institution to explore mechanisms formembers to voluntarily transfer SDRs to vulnerable countries. Differentstakeholders have proposed a number of, not mutually exclusive, forms forsuch mechanisms, for instance: contributing to the IMF Poverty Reductionand Growth Facility, financing expanded debt relief through the CatastropheContainment and Relief Trust, strengthening the financial capacity ofmultilateral or regional financial institutions, and creating new vehicles –such as the Liquidity and Sustainability Facility or the Fund for Alleviation ofCovid-19 Economics.