In Brief: US Treasury indicates support for SDRs in letter to G-20

U.S. Treasury Secretary Janet Yellen. Photo by: Federal Reserve

The likelihood of a new issuance of International Monetary Fund Special Drawing Rights providing liquidity to low-income countries rose dramatically Thursday as the U.S. signaled its support.

In a letter to members of the G-20 group of nations, U.S. Treasury Secretary Janet Yellen said that a new allocation of SDRs could facilitate “much-needed health and economic recovery efforts” for low-income countries and that the U.S. looks forward to “discussing potential modalities for deploying SDRs.”

To make SDRs effective, she continued, the G-20 must create transparency and accountability in how they are exchanged and used. She encouraged G-20 countries to give their excess SDRs to low-income countries.

The letter also called for greater support of a rapid global vaccination program, which Yellen called “the strongest stimulus we can provide to the global economy,” and for G-20 countries to continue domestic fiscal and policy actions. Yellen wrote that the policymakers of leading economies need to support low-income countries in their pursuit of climate goals “balanced with their development objectives.”

Why it matters: With the U.S. on board, it seems likely the G-20 will support a new issuance of SDRs. During former President Donald Trump’s administration, U.S. objections were a key hurdle. There seems to be a consensus around an issuance of at least $500 billion, which the Italian presidency of the G-20 supports. But advocates have pushed for much more — $3 trillion — and G-20 leaders are likely to wait for an IMF needs assessment before making their decision, Eric LeCompte, executive director at the Jubilee USA Network, told Devex.

What’s next: While these issues are likely to come up at the G-20 meeting Friday, approval of new SDRs would come at the IMF meeting in April at the earliest.

About the author

  • Adva Saldinger

    Adva Saldinger is a Senior Reporter at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.