The Washington Office of the Presbyterian Church U.S.A. is calling for Congress to swiftly authorize the International Monetary Fund (IMF) to release Special Drawing Rights (SDRs) to help struggling countries combat the coronavirus.
The SDR is an international monetary reserve asset that was created by the IMF in 1969 to supplement its member countries’ official reserves.
With COVID-19 now topping 19 million cases worldwide, SDRs would be especially helpful to low- and middle-income countries that need to obtain food and COVID-19-related necessities, such as personal protective equipment (PPE) and medical supplies, according to an Action Alert from the Presbyterian Office of Public Witness (OPW).
The coronavirus has ravaged the health and economies of many countries and is expected to lead to an increase in world hunger as sickness, lockdowns, job losses, reduced hours, poverty, racism, conflict and other factors contribute to suffering.
During this global crisis, “we must remember we are part of a global community and all of us need to work together to ensure our collective well-being,” said Catherine Gordon, OPW’s representative for international issues.
SDRs can be used by countries to maintain their international reserves or to exchange them for currency, such as the U.S. dollar or Euro, to pay off debts or cover domestic costs, according to OPW.
SDRs “offer a no-cost way for the United States to assist our global neighbors,” Gordon said. “A major issuance of SDRs would be particularly meaningful to the world’s most impoverished countries. These countries could use the added resources to buy medical supplies as well as food to prevent a looming hunger pandemic.”
OPW’s Action Alert says Congress must move quickly to authorize the IMF to release SDRs to help countries fight the pandemic. It also asks members of the public to contact their Congress members to show their support for releasing SDRs. (The House recently passed legislation in favor of SDRs, but the Senate has not.)
The alert notes that U.S. allies, leadership of the United Nations and IMF, and numerous past and present world leaders have advocated for such an allocation to fight the pandemic. But the United States has been a stumbling block.
“While a consensus was almost reached at the IMF in April, an issuance of SDRs requires a supermajority of 85 percent of votes of IMF members, meaning that the US — which holds a 16.5 percent share of votes — holds veto power over any issuance and has so far prevented this decision from taking place,” according to an advocacy piece published in June by the Center for Economic Policy and Research (CEPR) in Washington, D.C., and Oxfam America.
U.S. Treasury Secretary Steven Mnuchin has said that releasing SDRs wouldn’t be the best way to address the COVID-19 crisis.
“We recognize that a number of IMF members support a general Special Drawing Right (SDR) allocation to the membership,” he said in April. “In our view, an SDR allocation is not an effective tool to respond to urgent needs. Almost 70% percent of an allocation would be provided to G20 countries, most of which do not need and would not use additional SDRs to respond to the crisis,” while those with more pressing needs “would receive just 3% of any allocation.”
Still, according to CEPR and Oxfam, “millions of lives can be saved and the global economy can recover far more quickly if the U.S. and other IMF members urgently approve a general SDR allocation.”
To read the OPW’s Alert and act upon it, go here.
by Darla Carter, Presbyterian News Service