African ministers of finance, planning and economic development have called for reforms to the International Monetary Fund (IMF) Special Drawing Rights (SDR) system to strengthen the global financial safety net and make more liquidity available to developing countries.
The call was made at a meeting of an African High-Level Working Group on the Global Financial Architecture, held in the margins of the African Development Bank (AfDB) Group Annual Meetings in Sharm el-Sheikh, Egypt, from May 22 to 26, 2023.
The Ministers stressed the importance of ensuring that SDRs are directed to the countries that need them most, and supported the redirection of SDRs to multilateral development banks, such as the AfDB, to achieve this objective.
They noted that the SDR reallocation proposal put forward by the AfDB and the Inter-American Development Bank was a viable technical solution that would use SDRs to provide much-needed liquidity to African countries. They called on SDR donor countries to participate in the proposal and thereby enable its implementation.
At the meeting, hosted by the Economic Commission for Africa (ECA), ministers also called for a reform of the SDR redistribution mechanism to encourage greater use of SDRs. Proposals were made to reform the SDR intermediation system.
African officials recommended that the IMF Executive Board update the “reserve asset feature” of the SDR to reflect today’s broad and unconditional use of reserves. Finally, they called for strengthening IMF measures to promote transparency in the SDR market.
Ministers also called for a reform of the SDR allocation formula to take into account countries’ liquidity needs in addition to IMF quotas.
The High-Level Working Group, coordinated by the ECA, comprises African Ministers of Finance, Planning and Economic Development, the African Union, the African Development Bank, Afreximbank and the World Bank.
Source: Agence Tunis Afrique Presse