Today, EU countries present at the AU-EU summit have not made concrete commitments to reallocate their share of special drawing rights (SDRs) to low- and middle-income countries. Instead, they simply reiterated the broad voluntary commitment made at the G20 last year.
In response, Jeroen Kwakkenbos, Oxfam’s EU aid expert, said: “It is extremely disappointing to see EU countries not stepping in and publicly committing, individually or collectively, to reallocate a concrete amount of special drawing rights to the poorest countries. We are also disappointed to see little discussion of alternative mechanisms to channel these SDRs outside of the International Monetary Fund (IMF).
“As things stand, we are left with only IMF channels, which can and should only absorb a limited amount, and the funds are provided in the form of loans with risky terms. This comes at a at a time when the pandemic has hit governments’ pockets hard and debt is skyrocketing.African governments spend on average almost four times more on debt repayment than they spend on public services.
“Reallocating at least $100 billion in special drawing rights from rich countries – with EU countries spitting out their fair share – would free up money for poorer countries to invest in public services whose they badly need such as hospitals and schools.These resources must be channeled through various channels, with as little debt as possible, and to all the countries that need this respite.The best use of SDRs can only be obtained ‘by not attaching austere economic conditionality to them, by offering maximum transparency on how they are used and by involving citizens through public consultations at the national level.
Notes to Editors
The International Monetary Fund (IMF) issued $650 billion in SDRs in response to the Covid-19 pandemic. This freed up fiscal space, providing nearly $400 billion in additional reserves to the world’s richest economies, $230 billion to middle-income countries and $21 billion to low-income countries.
African governments spend on average almost four times more on debt repayment than they spend on public services.
French President Emmanuel Macron and European Council President Charles Michel want EU countries to share their SDR allocations with Africa.
Last October, G20 countries pledged to allocate US$100 billion in SDRs to “vulnerable countries whose economies have been hit hard by the Covid-19 crisis”.
Last September, Oxfam, alongside 280 other CSOs and academics, set out the key principles needed for the fair distribution of special drawing rights.
For more information on the reallocation of SDRs, read Oxfam’s latest blog ‘How to make the most of your IMF money’.
IMF calculations estimate that 285 billion US dollars are needed to respond to the health crisis on the African continent.
The AU-EU Summit brings together the Heads of State and Government of the AU and the EU. This year is the sixth edition of the summit and was held on February 17 and 18.
Jade Tenwick | Brussels, Belgium | [email protected] | mobile +32 473 56 22 60
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