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More SDRs for Latin America and the Caribbean: An Effective Tool in an Era of Multiple Crises

New report from Latindadd and CEPR examines the impacts of Special Drawing Rights (SDRs) in Latin America and the Caribbean.

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The international reserves of 32 countries in Latin America and the Caribbean increased by up to 9.4% with the allocation of Special Drawing Rights in 2021, which also allowed 19 countries in this region to use the resources obtained to meet external needs and, mainly with fines for fiscal support, as demonstrated by a new report from the Center for Research in Economics and Politics (CEPR) and the Latin American Network for Economic and Social Justice – Latindadd.

The text also specifies that the last allocation favored economic stability and strengthened the fiscal response of the countries in the region against the COVID-19 pandemic. The study highlights the need for the International Monetary Fund (IMF) to issue new allocations to counteract the combined effects of the climate crisis, more poverty and the increased burden of debt service that affects the region.

The report reflect SDRs as the main alternative financing mechanism, capable of creating resources for developing countries without raising debt levels. On the other hand, the recent report questions the restrictions on access to SDRs, since they are in contradiction with the original spirit that motivated the 2021 allocation, in relation to the exclusion of Venezuela, a measure that was adopted solely under political criteria depriving this country and its population from benefiting from the liquidity provided by the SDR allocation.

Globally, 2021 issuance was 456 billion SDR, equivalent to US$650 billion. The countries of Latin America and the Caribbean received a total of 36.2 billion SDR, equivalent to 51.5 billion dollars.

Published on Juanuary 17, 2024