G20 calls on IMF to prepare for new SDR allocation

Washington, Apr 8 (IANS): Finance officials from the Group of 20 (G20) major economies called on the International Monetary Fund (IMF) to prepare for a new allocation of Special Drawing Rights (SDR) while agreeing to extend debt relief for the world’s poorest countries through the end of 2021.

“We call on the IMF to make a comprehensive proposal for a new Special Drawing Rights general allocation of USD 650 billion to meet the longterm global need to supplement reserve assets,” G20 finance ministers and central bank governors said in a communique during the virtual spring meetings of the IMF and the World Bank on Wednesday, Xinhua news agency reported.

“A new allocation would enhance global liquidity and will help the global recovery, building on the last assessment made by the IMF in 2016,” the communique said.

G20 officials also asked the IMF to explore options for members to channel SDRs on a voluntary basis to the benefit of vulnerable countries, without delaying the process for a new allocation.

“We also invite the IMF to present proposals to enhance transparency and accountability in the use of the SDRs while preserving the reserve asset characteristic of the SDRs,” said the communique.

Created by the IMF in 1969, the SDR is an international reserve asset to supplement members’ official reserves. It can be exchanged among governments for freely usable currency in times of need.

In order to help the poorest countries combat the Covid-19 pandemic, G20 officials agreed on a final extension of the Debt Service Suspension Initiative (DSSI) by six months through the end of December 2021.

“This final extension will allow beneficiary countries to mobilize more resources to face the challenges of the crisis and, where appropriate, to move to a more structural approach to address debt vulnerabilities,” the communique said.

G20 officials also welcomed the reestablishment of the Sustainable Finance Study Group, which was reactivated on the initiative of the Italian Presidency and is now co-chaired by China and the United States.

“We look forward to its work, for 2021, on developing, in a collaborative manner, an initial evidence-based and climate-focused G20 sustainable finance roadmap, improving sustainability reporting, identifying sustainable investments, and aligning International Financial Institutions’ efforts with the Paris Agreement,” the communique said.