Addis Ababa, May 23, 2023 (FBC) – African Ministers of Finance, Planning and Economic Development have called for reforms of the IMF’s Special Drawing Rights (SDR) system to strengthen the global financial safety net and make more liquidity available to developing countries.

The call for reforms was made during a meeting of the Africa High-level Working Group on the Global Financial Architecture on the margins of the 2023 Annual Meetings of the African Development Bank Group held in Sharm El-Sheikh, Egypt.

Coordinated by the Economic Commission for Africa (ECA), the High-level Working Group comprises African Ministers of Finance, Planning and Economic Development, the African Union, the African Development Bank, Afreximbank, and the World Bank, and includes the participation of IMF staff and Executive Directors.

The Group serves as a forum to develop reform proposals for the global financial architecture and strengthen the African voice on the global stage.

The ministers emphasized the need for SDR allocation decisions to be made in a rule-based analytical manner to reduce the discretionary and political nature of the allocation process.

They advocated for the rechanneling of SDRs to Multilateral Development Banks, such as the African Development Bank, as a means to achieve this goal.

They noted that the proposal for SDR rechanneling put forward by the African Development Bank and the Inter-American Development Bank provides a viable technical solution that would allow to leverage SDRs to provide much needed liquidity to African countries.

They called upon SDR donor countries to participate in the proposal and thereby enable its implementation.

The ministers further urged for a reform of the SDR allocation formula to take into account countries’ liquidity needs in addition to IMF quotas. By doing so, a greater proportion of future SDR allocations would reach countries with the largest liquidity needs, thus enhancing the effectiveness of SDR allocations in stabilizing the global economy.