Has the 2021 general SDR allocation been useful? For what and for whom?

In the face of the COVID-19 crisis, the International Monetary Fund (IMF), other multilateral institutions and countries took unprecedented measures. Inter alia, the IMF agreed on an historical SDR allocation that more than tripled the volume of SDRs to cover long-term global reserve needs and ultimately support vulnerable countries. Member countries can keep SDRs to boost their reserves or use them in other ways, including to cancel their debts with the IMF, lend to the IMF or exchange SDRs for currencies. This document evaluates how members have used the 2021 SDR allocation. The findings show that most of the allocation has been used to increase reserves, although 40% of emerging economies and more than 60% of low-income countries have used SDRs to service their debts with the IMF or to exchange for currency, mainly for budgetary purposes in relation to social and health policies. Furthermore, in line with the G20’s objective to channel USD 100 bn of SDRs to countries in need, members with sound economic positions have voluntarily lent some of their SDRs to IMF trusts that finance vulnerable countries in affordable terms.