Special Drawing Rights (SDRs) and ODA
Greetings from Brussels, I trust this email finds you well. I am hereby reaching out regarding the soon to be officially announced USD 650 billion in Special Drawing Rights (SDRs) – for those not familiar with SDRs, are intended to provide additional liquidity to lower-income countries, which have not been able to provide the types of massive stimulus packages that advanced economies have offered during the pandemic. SDRs are allocated to members of the SDRs department, which are all members of the IMF. However, not all members will need to use the SDRs into their own domestic economies. Currently, the IMF is also working on ways to improve transparency of how SDRs, are used, and how wealthy countries who don’t need them can pass them on to nations that do. One path is via the interest-free Poverty Reduction and Growth Trust – an arm from the IMF that lends to the poorest countries. SRDs members can channel their SDRs through this Trust.
What is it concerning for the us in the ODA world ? You may have seen this article in Devex: UK to charge Special Drawing Rights to aid budget – sources. And this reply from Oxfam International: How to Get the Biggest Bang for your IMF Buck. Thus, in the coming months we may see DAC members reporting their SDRs channelled to developing countries in their ODA budgets, thus, increasing their ODA figures without mobilising any additional resources. I have asked whether SDRs could be reported as ODA, whether ODA reporting directives would allow it, and the answer I have received is that “the reallocation of SDRs to developing countries will involve complex operations (loans or grants)” – so I am assuming yes. That said, it seems this has not been discussed recently at WP-STAT (yet, and still, to be followed up), to be found out if at the DAC. For example, the UK seems to be aiming to report a third of their SDRs channelled to developing countries against their ODA budget.
In any case, it may likely pick up at some point – in addition to the UK, it seems that other DAC countries may be interest in seeing how this discussion could evolves within the DAC notably France and Spain, and maybe Italy and Portugal. Thus, this email to see who would be interested in monitoring these SDRs/ODA to further discuss, here allow me to already tag few of you @BOND @CoordinationSud @CoordinadoraDeONGDs @PortugueseNGDOPlatform but also @Oxfam, @ONE, @RoAGlobal, @RoAAfrica, @IBON with apologies for those I am missing – please reach out and we can take it from there. And if you are already engaging in these discussions at national level please let us know what are you finding out.
I am looking forward to hearing from you.