Special Drawing Rights (SDRs) Utilization
SDRs are not a currency, nor a claim on the IMF, but a potential claim on freely usable currencies of IMF members with potential uses for development and climate finance.
2030 Goals
- Increase the capacity of the Resilience and Sustainability Trust (RST) and the Poverty Reduction and Growth Trust (PRGT) to manage and deploy rechanneled SDRs.
- Identify and utilize alternative prescribed holders, beyond the IMF, to rechannel SDRs for more innovative uses.
- Explore the potential for periodic allocations of SDRs and consider decoupling SDRs from IMF quotas.
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- Recent developments in SDRs include the IMF's historic $650bn allocation in August 2021 to provide global liquidity during the COVID-19 pandemic.
- The IMF's Resilience and Sustainability Trust uses SDRs to support low-income and vulnerable middle-income countries in addressing climate change challenges.
- Efforts are also underway to reallocate unused SDRs from advanced economies to vulnerable countries by the G20. Also, the MDBs, such as the AfDB, advocate for SDR reallocations to boost their lending capacity for sustainable projects.
- In a significant development in May 2024, the IMF approved the use of SDRs for the acquisition of hybrid capital. This decision allows member countries to use their SDRs to invest in financial instruments that possess both equity and debt characteristics, issued by prescribed holders.
Relevant Actors & Audiences
Multilateral Development Banks
World Bank , African Development Bank, Inter-American Development Bank
International Organizations
International Monetary Fund
Leading Countries and Alliances
G20 Ministries of Finance
International Financial Architecture Working Group
Milestones
The below events contain milestones related to SDR Utilization.
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Resources
The below resources all pertain to the topic of SDR Utilization.
IMF Resilience and Sustainability Trust
Fiscal Space, Special Drawing Rights (SDRs) Utilization
The IMF’s Resilience and Sustainability Trust (RST) helps low-income and vulnerable middle-income countries build resilience to external shocks and ensure sustainable growth, contributing to their longer-term balance of payments stability. It complements the IMF’s existing lending toolkit by providing longer-term, affordable financing to address longer-term challenges, including climate change and pandemic preparedness.
Poverty Reduction and Growth Trust
Fiscal Space, Special Drawing Rights (SDRs) Utilization
The PRGT is the IMF's main vehicle for providing concessional financing (currently at zero interest rates) to low-income countries.
The Challenge of Reallocating SDRs: A Primer
Fiscal Space, Special Drawing Rights (SDRs) Utilization
Center for Global Development