SDRs must move from back-burner to the front of the discussion: Oxfam

In response to the communiqué of the International Monetary and Financial Committee (IMFC), in which they welcome the coordinated approach agreed by the G20, supported by the IMF and World Bank, Nadia Daar, Head of Oxfam International’s Washington DC Office, said:

“It is good to see unity on most issues. But it is a big disappointment not to see agreement on issuing additional Special Drawing Rights, the IMF’s global reserve asset. Developing countries need trillions in financing to save lives and livelihoods and SDRs are allocations they don't have to pay back, unlike IMF loans. No matter how low the interest rates are on all these emergency financing loans, they still saddle countries with more debt. 

"During the 2008 global financial crisis, the IMF issued $283 billion in SDRs and many said it was too little, too late. The IMF has already said that the coronavirus pandemic will trigger the worst economic fallout since the Great Depression —if ever there was a time to expand SDR allocations in a major way, it is now. With the US having an effective veto on this discussion, they need to step up and push it forward.”

Issuing US$1 trillion in additional international reserves would dramatically increase the funds available to countries. Under current rules, this would give the Ethiopian government access to an additional $630 million —enough to increase its health spending by 45 percent.