U.S. Treasury Secretary Janet Yellen is urging wealthy nations to redistribute some of the hundreds of billions of dollars in Special Drawing Rights, or SDRs, that the International Monetary Fund allocated last month.
Sign up for Devex Invested
The weekly newsletter on how business, social enterprise, and development finance leaders are tackling global challenges.
Yellen “urged major economies to lend their SDRs to further support vulnerable countries,” according to a readout from a meeting of finance ministers from the G-7 group of nations Thursday.
Separately, Patricia Pollard, a Treasury official responsible for international monetary policy, said Thursday that the U.S. is not in need of the boost to its reserves.
“The U.S. strongly supports this idea of SDR channeling,” Pollard said during a panel discussion organized by the United Nations Development Programme, adding that Washington is backing a goal that would see “economically stronger countries channel up to $100 billion of their SDRs.”
Lars Jensen, a senior economist at UNDP, has calculated that 58 high-income countries received $438 billion of the total $650 billion SDR allocation, while 82 highly debt-vulnerable nations were given just $54.5 billion.
Why it matters: UNDP and others are noting the extreme debt distress facing a growing number of countries, made worse by the coronavirus pandemic. This comes amid a pressing need to spend on health services, COVID-19 vaccines, and social support for people hurt by the economic slowdown. The White House gave its initial support for reallocation in June.
What SDRs are not: The SDRs, Pollard said, are not a panacea but are just one of the tools to help prevent a sharp divergence between lower- and higher-income nations.
“I would urge all countries that have the ability to channel their SDRs to do so,” Pollard said, stressing that Washington wants this to be “new money” and “not a replacement” for existing foreign aid. The remarks could be seen as a swipe at the U.K., which plans to charge its SDRs to its aid budget.
More reading:
► IMF has allocated SDRs. Now, might they be redistributed?
► Opinion: Making $650B in SDRs work for lower-income countries
About the author
Shabtai Gold
Shabtai Gold is a Senior Reporter based in Washington. He covers multilateral development banks, with a focus on the World Bank, along with trends in development finance. Prior to Devex, he worked for the German Press Agency, dpa, for more than a decade, with stints in Africa, Europe, and the Middle East, before relocating to Washington to cover politics and business.
