In the face of an urgent need of additional financial sources for sustainable development, IMF’s Special Drawing Rights (SDRs) have been found to be important sources of financing development. An online roundtable titled „Channeling Special Drawing Rights through MDBs: how to make it (finally) work“ discussed this measure.
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The roundtable took place on 24 September 2024 at. IDOS finance team, Dr Yabibal Walle and Dr Kathrin Berensmann, co-organised it with IDDRI (France), ACET (Ghana), BRICS Policy Center (Brazil) and SIIS (China). It was moderated by Serah Makka (ONE Campaign) and opened with remarks by Pilar Garrido (Director, Development Co-operation Directorate, OECD). IDOS expert Yabibal Walle then introduced the discussion by presenting a summary of the consortium’s recent Policy Brief on the topic. The panel comprised Andrea Rieck (German Federal Ministry of Finance), William Roos (French Treasury), Hassatou Diop N’Sele (African Development Bank Group), Paulo Esteves (BRICS Policy Center) and Rob Floyd (ACET), and engaged an audience of up to 93 participants worldwide.
Given the urgent need for additional financial resources for sustainable development, the IMF’s Special Drawing Rights (SDRs) have emerged as a crucial source of financing. In particular, the G20 countries has pledged to channel USD 100 billion to low-income and vulnerable countries from their 2021 SDR allocations. One innovative proposal is the hybrid capital solution proposed by the African Development Bank Group and the Inter-American Development Bank. This mechanism aims to operationalize the channeling of SDRs to multilateral development banks (MDBs). The online roundtable addressed the remaining technical and political challenges that impede the realization of the full potential of channeling SDRs through MDBs. For instance, European countries are prohibited from channeling their SDRs to MDBs due to a (still informal) position taken by the European Central Bank. The debate has shown that this innovative instrument is a viable way of increasing development finance and suggested solutions to overcome existing challenges to its implementation.
