H.E. Kristalina Georgieva
Managing Director
International Monetary Fund700 19th St NW,
Washington, DC 20431
Dear Managing Director Georgieva,
Re: Our Support for SRDs Recycling and Advocacy for New SDRs Issuance
We, the undersigned organizations, thank the International Monetary Fund (IMF) for issuing a historic $650 billion Special Drawing Rights (SDRs) in August 2021 to respond to the unprecedented global economic crisis caused by Covid-19 pandemic. The resources were a lifeline for developing countries.
Indeed, the Center for Economic and Policy Research (CEPR) notes that “80 developing countries have used SDRs since the August allocation, 32 countries have exchanged SDRs for hard currency, for $11.6 billion, 55 countries have paid the IMF with SDRs, for $6.5 billion, 39 countries have recorded the SDRs in government budgets or have used them for fiscal purposes, for $37.3 billion.” If the IMF had issued the $2 trillion we advocated for, the impact could have been more significant.
While the COVID-19 pandemic seems to have stabilized in some countries, the economic crisis persists with devastating consequences. Moreover, the repeated resurgence of new COVID-19 variants demonstrates that the global pandemic threat of this virus is not behind us yet. Therefore, we must do all that is possible to make sure we do not go back to the early days of this pandemic which claimed many lives and livelihoods with devastating economic, social and political impact. Although COVID-19 vaccines are saving lives globally, the majority of the populations in low and middle – income countries remain unvaccinated due to vaccine apartheid. As of early April 2022, 84 percent of Africa’s population had not been fully vaccinated. Countries need resources to build pandemic resilient health systems.
Unfortunately, the war in Ukraine is undermining the recovery from the destructive effects of COVID-19. On April 5, the United Nations said that 1.7 billion people — over one-fifth of the global population — have been thrust into poverty, destitution, and hunger because of the Russian invasion of Ukraine. Even before the war in Ukraine, 811 million did not have enough to eat. The war has pushed up “food prices and threatened millions more people with starvation.” The situation in emerging countries is going to become much bleaker in the coming months because Ukrainian grain is an essential food source for some of the poorest and most vulnerable people.
The recycling and new issuance of SDRs is an effective tool to help solve the scramble for limited resources to address existing and new crises. We do not need to take food off the table of someone to give it to anyone else because there is not enough to go around or because of new and equally serious crises such as Russia’s senseless invasion of Ukrainian. We can, and should, use the SRD tool to help feed all of them.
In West and Central Africa, the World Food Program (WFP) and the International Fund For Agricultural Development have warned that 41 million people could face a food crisis this year. Prices for basic food staples have jumped 40 percent above the five-year average in Burkina Faso, Liberia, Mali, Mauritania, Niger, Nigeria, Sierra Leone, and Togo. In East Africa, 28.1 million people face acute food insecurity while 7.4 million are experiencing emergency food insecurity, which means “very high acute malnutrition and excess mortality.”
Special Drawing Rights are the best way for the International Monetary Fund to aid the countries that need help to stabilize their economy, address health issues, invest in developing updated medical capabilities, meet education needs, advance infrastructure projects, and create jobs.
SDRs also offer a path to a better future, one that is better for the environment. The financial asset is a way for lower- and middle-income countries to finance programs that will enable the transition to climate mitigation and climate adaptation policies. Therefore, we ask that the IMF:
1. Encourage rich countries to recycle their Special Drawing Rights which they do not need
2. Make the recycling a grant instead of a debt
3. Issue an additional $1.5 Trillion for greater impact
4. Ensures that there are very strict transparency and accountability measures to minimize, prevent and if possible stop careless autocratics regimes and kleptocrats from embezzling these resources.
Sincerely
Organizations
1. Action Corps
2. Africa Faith and Justice Network
3. Friends of Angola
4. Maryknoll Office for Global Concerns
5. US-Africa Bridge Building Project
6. Watch Democracy Grow