How are Special Drawing Rights used?

SDRs are a useful tool to plug fiscal gaps, meet external debt obligations, or address foreign exchange shortages. For example, if Liberia is facing a foreign currency crunch, it can sell a portion of its SDRs to France – in exchange for euros – and use those euros to pay for imported goods, such as fertiliser.

The majority of African governments have disclosed how they are using their SDRs. This includes boosting their foreign exchange reserves, enhancing health and social protection systems, or paying off debt. The map below shows African countries' current SDR holdings, shown as a percentage of their total SDR allocations. You can explore countries’ cumulative and current holdings by clicking on each country.

Tracking the SDR channelling commitment

SDRs are allocated according to a country’s IMF quota, which broadly reflects its relative size in the global economy. That means advanced economies — which have the least need — received the lion’s share of the US$650 billion. Africa received only 5% of the total, roughly US$33 billion in SDRs, while the G20 and other advanced economies collectively received over US$500 billion. In 2021, G7 countries (and later affirmed by the G20) committed to channel US$100 billion of their SDRs (or equivalent contributions) to countries most in need, including in Africa.

ONE is actively tracking new country pledges towards the US$100 billion commitment. The table below is updated regularly based on the latest publicly available information. Our latest tally shows a total commitment of about US$ billion, exceeding the US$100 billion commitment.

How can SDRs be channelled?

Advanced economies primarily channel (or on-lend) their SDRs through two IMF trust funds: the Poverty Reduction and Growth Trust (PRGT) and the Resilience and Sustainability Trust (RST).

The PRGT currently provides zero interest rate loans to the poorest low-income countries. The RST was established specifically to facilitate the channelling of SDRs. It provides affordable loans to help low-income and vulnerable middle-income countries address long-term structural challenges, including climate change and pandemic preparedness. However, the PRGT and RST, in their current set-up, will not absorb the entire $100+ billion, so additional mechanisms are needed.

The below visualisation shows the status and key features of country requests for financing from the RST. To date, `` countries have formally requested support.

Other options for channelling SDRs

Multilateral development banks (MDBs) are an attractive and viable option to channel the remainder because they can leverage loaned SDRs to mobilise additional capital.

The African Development Bank (AfDB) and the Inter-American Development Bank (IDB), have put forward a proposal to use SDRs as part of a hybrid capital instrument that could be leveraged on commercial markets to raise three to four times the value of the loaned SDRs. For instance, every US$100 million of SDRs could be leveraged into as much as US$400 million of low-cost loans to African countries. If successful, this plan would magnify the impact of SDRs and provide a template that other MDBs could replicate.

After over a year of deliberations and technical fine-tuning, the IMF Executive Board approved the use of SDRs as MDB hybrid capital in May 2024. The AfDB and IDB are now working to secure pledges from a few advanced economies, with the AfDB seeking an initial total contribution of SDR 2.5 billion. While a few advanced economies have expressed interest, none have officially pledged, largely due to legal constraints.

Notably, the President of the European Central Bank (ECB), Christine Lagarde, has repeatedly underscored that SDR channelling via MDBs is not possible for eurozone countries. The ECB contends that doing so would risk the SDR’s reserve asset status and potentially be incompatible with the EU’s rule that central banks cannot finance government spending. Eurozone countries can still support the AfDB-IDB proposal via a Liquidity Support Agreement (LSA), a guarantee that will backstop the SDR on-lending. France has already confirmed that it will issue an LSA.

What ONE is calling for:

• The ECB should find a solution to allow eurozone countries to channel their SDRs through MDBs, starting with the AfDB. Other advanced economies should also find legal and technical fixes to facilitate more SDR channelling through MDBs, including the AfDB.
• Those economies that can’t commit their SDRs to the AfDB-IDB’s hybrid capital instrument, should follow France’s lead and commit to participate in the Liquidity Support Agreement scheme.
• African governments should commit to open and transparent processes that allow citizens and civil society organisations, as well as legislatures, to track how allocated and channelled SDRs are used. This includes publicly disclosing plans, publishing progress reports, and conducting assessments of how the implemented activities and results align with objectives.