How the IMF can do more for Africa

African countries are facing tough financial times. External debt has tripled since 2008, dramatically pushing up the amount being spent on servicing loans. This means there’s less money to spend on critical things like health and education. Kevin P. Gallagher and Abebe Shimeles argue that the International Monetary Fund (IMF) has the means to make a huge difference by making better and more extensive use of Special Drawing Rights. These aren’t a currency, but countries can use them to pay back IMF loans, or they can exchange them for foreign currencies. African countries should use the IMF meetings underway in Washington to lobby for more of these rights to be issued and for their distribution to be made more equitable and easier.

At the 2021 UN Climate Summit, Barbados prime minister Mia Mottley called for more and better use of special drawing rights (SDRs), the International Monetary Fund’s reserve asset. The special drawing right is an international reserve asset created by the IMF. It is not a currency – its value is based on a basket of five currencies, the biggest chunk of which is the US dollar, followed by the euro. It is a potential claim on the freely usable currencies of IMF members. Special drawing rights can provide a country with liquidity.  Countries can use their special drawing rights to pay back IMF loans, or they can exchange them for foreign currencies. Read more>>