At the 2021 UN Climate Summit, Barbados Prime Minister Mia Mottley called for greater utilization of Special Drawing Rights (SDRs), an IMF reserve asset, to support climate-vulnerable nations, especially in Africa. SDRs, while not a currency, provide countries with liquidity and can be exchanged for foreign currencies or used to repay IMF loans. African nations, grappling with debt and economic strain, received $33 billion in SDRs during the pandemic, a lifeline that didn’t worsen their debt burdens.
African economies are facing severe financial challenges due to rising external debt, inflation, and the impacts of global crises such as COVID-19 and the Russia-Ukraine war. Leaders are calling for another issuance of SDRs to stabilize economies and boost investments in development, particularly for climate resilience. Despite past SDR allocations benefiting Africa, advanced economies still control the bulk of SDR distribution. African leaders are pushing for reforms at the IMF to ensure a fairer distribution of SDRs to support sustainable development and ease debt burdens.
The African Development Bank is also advocating for re-channelling unused SDRs from wealthy countries to fund productive initiatives in Africa, but progress remains slow. Leaders hope that upcoming IMF and G20 meetings will prioritize these efforts to build a more financially stable and climate-resilient future.
