Devex Newswire: Decoding the acronym jumble of IMF’s RST and SDRs

RST, SDRs, and IMF — have we broken our acronym record for a single sentence? It’s safe to say we did it for a good reason: To explain what you need to know about an important financial lifeline in the world of development.

Also in today’s edition: A committee that sets the rules on global aid gets a new chair, children face an epidemic of violence in schools, and climate change gets siloed at the United Nations.

Alphabet soup

RST and SDRs — it’s hard enough to remember what the acronyms stand for, let alone what they actually do.

Fortunately, my colleague Shabtai Gold has demystified the International Monetary Fund’s Special Drawing Rights and their associated Resilience and Sustainability Trust, and why they matter.

In short — and there’s really no short answer to this, so read Shabtai’s full story — SDRs are a form of faux money that can be converted into real cash, while the RST is a new fund for high-income nations to move their excess SDRs to low- and middle-income countries to fuel their development and help them out of a pinch.

How much are we talking about here? Some $650 billion worth of SDRs were disbursed in a general allocation in 2021. That’s a massive amount, but most of it actually goes to high-income countries for reasons that Shabtai can explain better than I can.

But this is where the RST comes in — as a workaround to get that money to the countries that need it more.

Only SDRs are not actual money. They’re more like made-up Monopoly money. Still with me?

They’re assets created and issued to members by IMF to boost global liquidity in times of crisis. Governments can keep SDRs to buttress their foreign exchange reserves, trade them for real cash to buy things such as food and medicines, or use them to pay back certain debts. But the SDRs themselves don’t need to be paid back — a big part of their appeal.

SDRs and the RST: Explaining the acronyms of IMF's currency system (Pro)

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A dark 2023

IMF will probably need all the tools at its disposal, as the fund’s chief Kristalina Georgieva predicts 2023 will be a “difficult year.” That’s understated financespeak for “hold on, things are going to get rough.”

Since the last IMF report in the autumn, “the picture has darkened” and chances of a further slowdown in global growth have risen, Georgieva said on Thursday at the Reuters Next conference in New York.

Part of the problem, Shabtai tells me, is the simultaneous downshift in the United States, Europe, and China. Georgieva said that China was once a key driver of global growth, but "this is not the case now, and it's not going to be the case next year."

Meanwhile, Russia's “senseless invasion” of Ukraine continues to have far-reaching consequences. And, as ever, she did not miss a chance to urge creditor nations to find ways to help heavily indebted countries — and not waste any time.

ICYMI: Georgieva spoke at Devex World this year, warning of the “growing risk of a debt crisis.”

Nordic nail-biter

It was a close race, but in the end, Denmark’s Carsten Staur edged out Norway’s Nikolai Astrup on Wednesday to clinch the chair of the Organisation for Economic Co-operation and Development’s influential Development Assistance Committee.  

DAC sets the rules on what donors can count as official aid, and the chair sets the agenda while navigating politically thorny issues such as how to count excess vaccine doses and refugee costs.

The victory of Staur — an experienced candidate who offered a more traditional vision of development assistance than his younger rival — suggests that members opted for a continuity candidate. But the split vote should serve as a warning for Staur that he has his work cut out for him, my colleague Vince Chadwick writes.

"I think the future DAC chair should look at the numbers on the vote and see that his win was marginal," one official from a DAC member tells Vince.

Read: How donors broke for Denmark in race to chair aid rule-setting body

And ICYMI: The 3-man race to replace Moorehead as DAC chair (Pro)

Danger in the classroom

Many of the debates in global education focus on issues like boosting enrollment and basic skills such as math and reading. But none of that matters much if kids aren’t safe in the classroom.

Devex contributor Sophie Edwards reports on how pervasive violence in schools is, with corporal punishment, sexual harassment and abuse by teachers, and violent bullying, still the norm in countries around the world.

There’s an “epidemic of violence against children,” Susannah Hares of the Center for Global Development tells Sophie. “Yet the issue is glaringly absent from education reports and donor strategies. This needs to change.”

Read more: Children face an 'epidemic of violence' in schools

Lack of UN-ity

Ibrahim Thiaw only served as interim head of the United Nations Framework Convention on Climate Change for a month, but in that short span of time he noticed a big problem: The agency’s mitigation and adaptation teams “apparently don’t talk to each other.”

“We as civil servants, we have siloed so much, we actually call them pillars which are even worse, as pillars don’t touch each other,” he told my colleague William Worley on the sidelines of the 27th U.N. Climate Change Conference in Sharm el-Sheikh, Egypt.

Thiaw, a Mauritanian national who now serves as executive secretary of the U.N. Convention to Combat Desertification, lamented that this lack of coordination is emblematic of a broader approach to climate that treats mitigation and adaptation as distinct agendas.

“I think the time has come for the world to understand that these issues are all interconnected.”

Ibrahim Thiaw: UNFCCC teams 'don't talk to each other'

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Rioux confessions

While at COP 27, Will also sat down with Rémy Rioux, the chief executive officer of the French Development Agency, who offered candid observations on how the summit has changed since 2015 — when he was the chief negotiator on the finance track of the landmark Paris Agreement — and whether COPs have become an opportunity for greenwashing.

Will was just as candid, grilling Rioux on issues ranging from his agency’s willingness to provide loss and damage compensation to Egypt’s human rights record.

COPcast: AFD boss Rémy Rioux on climate progress

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Consulting essentials

Development consulting can be rewarding — personally, professionally, and, let’s face it, financially. It’s no surprise then that consulting gigs are in such high demand.

To help you compete, our careers team has compiled an essential toolkit on everything you need to know — from how much to charge clients, to how to network your way into a job.

Download: Your development consultant toolkit 

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In other news

Lebanon, host to 2 million Syrian refugees, wants the U.N. to pitch in to repatriate the displaced back to their home country. [Xinhua]

The number of women and infants dying in childbirth in sub-Saharan Africa is projected to increase to five times the set target by 2030 if no new investments are made. [UN News]

The European Centre for Constitutional and Human Rights says it has reported Malta’s prime minister and Italy’s deputy prime minister to the International Criminal Court for crimes against humanity over their treatment of migrants trying to cross the Mediterranean. [Reuters]

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