By Freddy Mambara
Harare – The executive secretary of the United Nations Economic Commission for Africa (ECA) Dr Vera Songwe has welcomed the move by G7 finance ministers to support issuance of new Special Drawing Rights to help developing countries better respond to the COVID-19 crisis.
The UN Under Secretary-General said this while officiating at the meeting of the committee of experts of the Conference of African Ministers on March 19.
G7 finance ministers, at a virtual meeting on the same day, agreed to support issuance of Special Drawing Rights by the IMF.
The G7 consists of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States; and represents 58 percent of global net wealth (US$317 trillion) and at least 32 percent of global GDP based on purchasing power parity. The G7 are among the largest economic members of the IMF.
UK treasury chief Rishi Sunak, whose country holds the G7 presidency, said: “Today’s milestone agreement among the G7 paves the way for crucial and concerted action to support the world’s low-income countries, ensuring that no country is left behind in the global economic recovery from coronavirus.”
In response, Dr Songwe said, “This is a very important and strategic step on the road to a new issuance of Special Drawing Rights by the G7 finance ministers today. The SDRs are our chance to do something transformational for a large number of frontier economies. We are grateful for the leadership shown by the G7 Ministers.
“Now we need to work on mechanisms for on-lending so we can stretch the SDRs for countries that need them most… We need to get vaccines to countries and also support the recovery with market access instruments that crowd in the private sector such as the Liquidity and Sustainability Facility.”
The G7 said it would work with the IMF to enhance transparency and accountability around usage of SDRs and explore how countries could voluntarily recycle holdings of the instruments to support low-income economies. The G7 said discussions on the reforms should not delay any proposed immediate allocation of SDRs.
ECA, along with other organisations such as the African Forum and Network on Debt and Development and the SADC Parliamentary Forum, have been at the forefront of advocating for a significant issuance of SDRs as well as reform of the allocation model so that it better benefits developing countries.
Further, the organisations are also lobbying for an extension of the Debt Servicing Suspension Initiative (DSSI) from June 2021 to June 2022. AFRODAD and the SADC PF, at a joint webinar last week, said such an extension should be a precursor to eventual total debt cancellation.