Special Drawing Rights: International Monetary Support for Developing Countries in Times of the COVID-19 Crisis

Gallagher Kevin, Ocampo José Antonio and Ulrich Volz
Additional contact information
Gallagher Kevin: Boston University, Boston, MA, USA
Ocampo José Antonio: Columbia University, New York, NY, USA

The Economists' Voice, 2020, vol. 17, issue 1, 06

Abstract: A major issuance of special drawing rights (SDRs) through the International Monetary Fund would be a key tool to provide financial support to developing and emerging economies and limit the economic and financial fallout of the COVID-19 crisis. SDRs are an unconditional resource, and the case for such an allocation is very strong during an exogenous shock, such as the current one. An SDR allocation would enhance the international liquidity in the hands of emerging and developing countries, so that public responses to the health crisis are not imperilled by financial crises. Close to two-fifths of a new SDR allocation would directly go to developing and emerging economies. In addition, a new mechanism should be created through which countries that do not need their SDR allocation lend them to the IMF, to increase the Fund’s lending capacity. Developed countries can also allocate the SDRs they do not use for official development assistance.

Keywords: special drawing rights; international monetary fund; COVID-19; global financial safety net; G-20 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1515/ev-2020-0012

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