COVID-19 Report
ECA-ECLAC April 2022
Special Drawing Rights (SDRs) and the COVID-19 crisis Key messages Developing economies are the primary users of Special Drawing
Rights (SDRs) and are much more dependent on them than developed economies. The analysis of net SDR positions shows significant differentiation in SDR utilization rates between developing economies (42.9%) and developed economies (5.9%). More than 70% of the 190 IMF participant economies are under pressure, with SDRs holdings below their SDRs allocations.
The SDR allocation of US$ 650 billion implemented in August 2021
benefits all countries, but with about two thirds (US$ 420 billion) of this going to developed economies, the balance will fall woefully short of developing countries’ financial needs.
Contents Key messages................................................... 1 A. The pandemic and developing countries’ financing needs............................................ 2 B. SDRs and their advantages......................... 5 C. Recipient countries of the SDR allocation........................................ 8
The new SDR allocation improves global and developing economies’
D. Determining the value of SDRs to be reallocated from developed to developing countries (low-and middle-income countries)......................... 13
To address low- and middle-income countries’ development financing
E. Proposed means of reallocating SDRs...... 16
balance-of-payments positions by increasing the share of SDRs in the reserve assets for all countries, thereby providing a direct liquidity boost to developing countries, without raising debt burdens. needs, leveraging SDR reallocation through on-lending vehicles, such as the Liquidity and Sustainability Facility (LSF), a trust for middle-income countries, multilateral and regional development banks as well as the Poverty Reduction and Growth Trust (PRGT), is essential to provide an appropriate window for financing development and global public goods (e.g. procurement of vaccines and creation of a vaccine facility).
The coronavirus disease (COVID-19) pandemic is the worst global
crisis since the Second World War, with developing countries suffering more devastating economic and social effects than developed countries. These effects are not limited to the short run but will extend into the medium- and long-run horizons. Governments’ increased pandemic-related expenditure (on health facilities, cash
F. Conclusion.................................................. 21 Bibliography.................................................... 22 Annex............................................................... 25