International organisms during this pandemic are under scrutiny and surely for many and good reasons. However, even in the weed fields some good wheat can be harvest. The United Nations has provided many juridical tools and agreements among its member States that support a claim for social justice.
The IMF (International Monetary Fund), for its part, can play a role in providing liquidity and supplementing member countries’ official reserves, preventing the spread of poverty in case of emergency such as during Covid19. It is the Special drawing rights (SDRs) created in 1969 to supplement a shortfall of preferred foreign exchange reserve assets, namely gold and U.S. dollars. It is also a tool for the governments to prevent sovereign risk. A nation is a sovereign entity. Any risk arising on chances of a government failing to make debt repayments or not honoring a loan agreement is a sovereign risk. IMF allocates SDRs (Special Drawing Rights) to countries; private parties can neither held nor use it.
In August 2009, the SDRs in existence was around XDR 21.4 billion. During the global financial crisis of 2009, an additional XDR 182.6 billion was allocated to provide liquidity to the global economic system. By October 2014, the number of SDRs in existence was XDR 204 billion and insofar it is SDR 204.2 billion (equivalent to about US$281 billion). The value of the SDR is based on a basket of five currencies - the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.
Before its creation, the international community had to face several restrictions in increasing world trade and the level of financial development, as gold and US dollars, which were the only means of trade, were in limited quantities. The IMF created SDR in order to address the issue.
SDRs are distributed to central banks of countries in proportion to their IMF quotas. Countries can exchange SDRs for freely usable currencies when they are in weak financial positions, as was the case amid the global financial crisis and now during the pandemic crises.
Even though, the SDR is neither a currency nor a claim on the IMF, it is a potential claim on the freely usable currencies of IMF members and Governments can exchange theirs SDRs for preferred foreign currencies.
“We have the tools to enhance global liquidity; I urge you to use them, and especially to consider a new issuance of special drawing rights,” (UN Secretary-General António Guterres, May 28, 2020)
Only US-Congress can authorize the IMF to release the financial resource of Special Drawing Rights at the scale and speed needed even though these resources are not loans to the governments. This is why in the midst of the Covid19 pandemic, Africa Justice and Peace Network, a faith-based NGO acting in Washington DC (US) called its member to advocate on the US Senate to support the issuance of Special Drawing Rights (SDR) by the IMF for some African countries in need. It asked for 2 Trillion. The U.S. House of Representatives with a bill of Friday, July 31, “Directs the U.S. to support the IMF’s issuance of 2 trillion special drawing rights and to support debt relief to help countries around the globe recover economically from COVID-19.” A decision humanitarian, international development, human rights, labor, faith-based, and policy organizations representing tens of millions of people in the U.S. heartily applauded. Of this amount, Togo, South Africa, Somalia, Sierra Leone, and other countries are benefiting.
Unfortunately, the financial jargon is often tough. Actually, ISO 4217 currency code for special drawing rights is XDR and the numeric code is 960. ISO 4217 stands for the standard published by ISO (International Organization for Standardization) that defines codes for the representation of currencies and provides information about the relationships between individual currencies and their minor units. Thus, code is XDR, number 960, and SDR the symbol.
The best way of advocating is, without a doubt, the pro-active Advocacy. It implies, however, to set an agenda and a plan before hand to prevent problems and demands a previous and exhaustive knowledge of the means, juridical tools, documents, agreements, and instances so to use them while claiming a support for an action. Unfortunately, often civil society and the people are not aware of them either for their inadvertence or for intended misinformation by the political power.