IMF Approves Use of Special Drawing Rights through Multilateral Development Banks
The International Monetary Fund (IMF) has recently given its approval for the use of Special Drawing Rights (SDRs) through multilateral development banks.
This decision has been welcomed by the African Development Bank (AfDB) and the Inter-American Development Bank (IDB), who see it as an opportunity to maximize the impact of SDRs.
The financial instruments proposed by the AfDB and IDB will allow for the multiplication of SDRs by up to four times, providing loans to finance social and climate projects. This innovative approach meets the IMF's criteria, enabling countries to lend their SDRs while still counting them as reserves.
This initiative responds to the G20's recommendations, encouraging multilateral development banks to optimize their balance sheets through financial innovation. In April, ten multilateral development banks published a joint statement to increase the impact of their work.
SDRs are an international reserve asset, valued by a basket of global currencies. The last general allocation of SDRs by the IMF, equivalent to $650 billion, took place in 2021 to help countries cope with the COVID-19 pandemic.
