Special Drawing Rights (SDRs) and the COVID-19 crisis
ECA, ECLAC
The coronavirus disease (COVID-19) pandemic is the worst global crisis since the Second World War, with developing countries suffering more devastating economic and social effects than developed countries. Governments’ increased pandemic-related expenditure combined with the drastic fall in tax revenues have increased their fiscal deficits and heightened their debt vulnerabilities. The generalized increase in fiscal imbalances and indebtedness has given rise to greater liquidity needs across developing countries, despite considerable heterogeneity in their fiscal positions and debt profiles.Easing liquidity constraints and expanding fiscal space for all developing countries requires alternative mechanisms in addition to existing credit facilities. The new general allocation of US$ 650 billion in Special Drawing Rights (SDRs) implemented on 23 August 2021 provided the most expedient mechanism to provide concessional liquidity at scale to all countries regardless of their level of income. Aside from its agility and financial effects, SDRs are the only democratic device to enhance policy space in developing economies, as it comes with no conditionalities. „ SDRs have several advantages over other IMF credit facilities and financing lines, including the fact that they do not generate debt, have a very low cost of use, and can reduce the risk premium for highly indebted countries. The new issuance of SDRs can help boost the level of international reserves of developing economies, strengthen their external positions, reduce their liquidity and default risk, and free up resources to meet the Sustainable Development Goals (SDGs).
Year of publication: |
April 2022
|
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Institutions: | Vereinte Nationen / Economic and Social Commission for Asia and the Pacific (issuing body) ; Vereinte Nationen / Economic Commission for Latin America and the Caribbean (issuing body) |
Publisher: |
Santiago de Chile : United Nations, ECLAC |
Subject: | COVID-19 | financing for development | fiscal affairs | macroeconomics | foreign exchange | monetary reserves | capital markets | developed countries | development finance | viruses | economic aspects | fiscal policy | epidemics | Coronavirus | Finanzpolitik | Fiscal policy | Entwicklungsländer | Developing countries | Entwicklungsfinanzierung | Development finance | Währungsreserven | Foreign exchange reserves | Welt | World | Epidemie | Epidemic | Wirkungsanalyse | Impact assessment | Finanzmarkt | Financial market |
Saved in:
freely available
Extent: | 1 Online-Ressource (circa 25 Seiten) Illustrationen |
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Series: | |
Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Amtliche Publikation ; Graue Literatur ; Non-commercial literature |
Language: | English |
Other identifiers: | hdl:11362/47856 [Handle] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10013329466
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