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COP28: Growing International Support for Channelling IMF Special Drawing Rights through Multilateral Development Banks

The governments of France, Japan, Spain, and the UK, along with Brazil (the incoming G20 Presidency), the International Monetary Fund, the United Nations, and ministers from Africa and Latin America, expressed their support for the use of a hybrid SDR instrument to provide development resources to countries in need in Africa and Latin America and the Caribbean. The IMF staff has confirmed the reserve asset status of an innovative solution by the African Development Bank (AfDB) and Inter-American Development Bank (IDB) to channel SDRs to Multilateral Development Banks and signaled readiness to bring the SDR hybrid capital proposal to the IMF’s Executive Board soon.

At a roundtable convened at COP28 in Dubai on December 4th, the participants commended the AfDB and IDB for their proposal to deliver much-needed financial resources to vulnerable countries. The meeting was co-hosted by the COP28 Presidency, AfDB, IDB, the Government of France, and the Government of Japan, with support from the Rockefeller Foundation.

Africa and Latin America, and the Caribbean received only a fraction of the total SDR allocation in 2021, and the African Union has urged wealthy nations to increase the SDR allocation to the continent and channel part of them through the African Development Bank. The channeling of SDRs through the MDBs strongly aligns with the MDB Vision Statement and the proposed mechanism will be structured as a hybrid capital instrument which can be accounted for as equity on the balance sheets of the AfDB and IDB.

Speaking at the roundtable, the African Development Bank’s President Dr. Akinwumi Adesina reiterated the benefits of channeling the SDRs through MDBs, highlighting that it can multiply the channeled SDRs by at least four times their original values. The IMF Deputy Managing Director congratulated the two banks for developing a concrete proposal, and the government of Japan expressed readiness to contribute to the proposed hybrid capital.

The government of France also pledged strong support for the SDR initiative, as did Spain, the United Kingdom, and the United Nations. Brazil confirmed that efforts to rechannel SDRs through MDBs to expand climate and development finance will form part of the agenda for their G20 Presidency.

Supportive remarks were also made by senior government officials from Kenya, Senegal, Brazil, Argentina, and the Asian Development Bank. President Adesina’s speech can be found at the AfDB’s website.

The African Development Bank Group (AfDB) is Africa’s premier development finance institution, contributing to the economic development and social progress of its 54 regional member states. For more information, visit www.AfDB.org.

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