The timeline for a new issuance of Special Drawing Rights is coming into sharper focus following an informal meeting of International Monetary Fund executive directors on Tuesday.
The group discussed a possible $650 billion new allocation of SDRs, and the directors “conveyed broad support” for IMF staff to create a proposal, according to a statement from IMF Managing Director Kristalina Georgieva.
“I intend to present by June a formal proposal to the Executive Board to consider a new allocation of US$650 billion, based on an assessment of IMF member countries’ long-term global reserve needs, and consistent with the Articles of Agreement and the IMF’s mandate,” she said in the statement.
Why it matters: In Georgieva’s words: “If approved, a new allocation of SDRs would add a substantial, direct liquidity boost to countries, without adding to debt burdens. It would also free up badly needed resources for member countries to help fight the pandemic, including to support vaccination programs and other urgent measures. And it would complement the range of tools deployed by the IMF to support our membership in this time of crisis.”
Advocates wanted a much larger amount — up to $3 trillion worth of SDRs — but Eric LeCompte, the executive director at Jubilee USA, which has called for a new issuance for the last year, called Tuesday’s announcement “incredible progress.”
What’s next: As IMF staff work on the proposal, they will also develop measures to enhance transparency and accountability in the use of SDRs and explore options for reallocating SDRs to vulnerable and low-income countries. A new issuance requires a 90-day congressional notification period, which will likely delay any official vote and the actual distribution of SDRs until August at the earliest.