By Patricia Miranda
In a context of multiple crises, Special Drawing Rights (SDRs) are an important alternative for financing within the international monetary system, as they can generate new resources without increasing debt levels.
Countries of the Global South can use SDRs to contribute to achieving Sustainable Development Goals (SDGs) and the adaptation goals of the climate agenda through a wide range of operations, such as strengthening international reserves, repaying public debt and reducing fiscal space gaps.
Another allocation or frequent allocations of SDRs for at least five years, which aim to benefit countries that are more exposed to economic, social and climate vulnerabilities, could make a difference for millions of people.
A fair distribution not linked to quotas could avoid recycling processes through new lending, thus preserving the no-debt creation spirit of SDRs.
In the short term, a change in the Balance of Payments manual would allow developed countries to rechannel unused SDRs to developing countries as grants rather than loans. Access to fair financing that does not contribute to the debt spiral requires a reform of the International Financial Architecture that includes SDRs as a source of liquidity.