A discussion arises on how countries can use SDR in their fiscal spending, following the approval of the issuance of US $ billion in SDR, which will be disbursed next Tuesday, August 23.
It seems that the only option provided, in principle, is to save these resources as international reserves. However, the pressing economic, social and health needs of low and middle-income countries, -the most affected by the pandemic- motivate to look for alternatives so that this issuance serves the recovery process and attention to Covid-19.
The director of the International Monetary Fund (IMF), Kristalina Georgieva, has suggested that SDR should be used to strengthen international reserves, but also to meet the spending needs of countries, as a sovereign decision that corresponds to each country.
In that sense, Latindadd publishes the “Manual for the use of SDR for fiscal purposes”, aimed at political authorities, ministry officials and civil society leaders. The Manual serves as a legal, accounting and financial guide to use SDR in the fiscal budget.
The Manual demonstrates that SDR are owned by countries and not by their central banks. For example, in the United States, Canada and the United Kingdom, the ministries hold the SDR. The Manual mentions a few past experiences of fiscal use, regarding the SDR issued in 2009, by countries in Latin America, Europe and Africa, while pointing out four ways for central banks to cooperate with governments and facilitate spending to meet the essential needs of their population.
On Wednesday, August 18, Latindadd together with the Ecuadorian economist Andrés Arauz, will present the Manual at 10:00 Eastern time during a virtual event for Latin America, through its social networks.
We invite you to read and share this document openly and freely, as a contribution from Latindadd to the context in which we currently live in Latin America, and to consider the possible use that can be given to SDR.