Africa Faces Fiscal Bind Without More IMF Special Drawing Rights

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The International Monetary Fund’s additional special drawing rights of $33 billion allotted to Africa fall short of what the continent needs to tackle the fallout from the coronavirus pandemic, according to the African Union.

The continent is urging the IMF to reallocate significant amounts of SDRs meant for rich nations that don’t need them to poor nations, according to Donald Kaberuka, a special African Union envoy for the coronavirus pandemic. He declined to give a target because negotiations are ongoing.

During the last global financial crisis, the IMF increased SDRs 10 times to about $210 billion to deal with liquidity issues at the time. It has since raised them to $650 billion to help nations fight the pandemic, Kaberuka said Tuesday in an interview.

“We are looking for a reallocation of a critical amount of SDRs, which can be used to repair the damage and provide the stimulus for our economies,” said Kaberuka, who was appointed a year ago alongside Ngozi Okonjo-Iweala, Tidjane Thiam and Trevor Manuel to marshal global support for the continent’s efforts to address the economic challenges arising from the pandemic.

Almost 90% of African nations have a vaccine program and have administered 19.3 million doses so far, according to the World Health Organization. This compares to about 1.2 billion shots given globally. The continent had 4.59 million cases and 122,907 fatalities by May 3, according to the Africa Centre for Disease Control and Prevention.

The real challenge for Africa is how to quickly reopen economies, which depends on the availability of vaccines to reach the threshold needed for herd immunity, he said.

“For the first time in 30 years, many of our countries will experience some degree of recession,” Kaberuka said. “Africa was very well prepared for this pandemic in terms of the measures governments put in place, but it has cost us a lot in terms of loss of output.”

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