As African countries sink further into debt, the African Forum and Network on Debt and Development, AFRODAD, together with Uganda’s Debt Network are pushing for a re-structuring of the International Monetary Fund’s Special Drawing Rights to stem the free fall of the economies of developing countries.
During the third high-level African conference on debt and development, Fidélité Nshimiyimana, Campaigns and Communication Manager at AFRODAD said the IMF has shown discrimination in the allocation of SDRs-coming especially at a time countries were still reeling from the COVID19 pandemic.
“There was a campaign by civil society organizations including AFRODAD asking the IMF to release Special Drawing Rights and it was agreed in 2021.What IMF did is that it issued USD650 billion in terms of Special Drawing Rights, but the continent of Africa was given only USD33 billion to share among the 54 African countries. So, we already see inequality right there,” she said.
Tumwebaze Patrick of the Uganda Debt Network noted that very frequently, the IMF gives money to those countries that don’t need assistance, thereby widening the gap of inequality between the rich and the poor.
“Member countries of the IMF have quotas (of SDR) depending on how you contribute. The bigger economies have bigger shares. Small Uganda has a smaller share. So, the IMF gives out SDRs based on those quotas. Uganda has a quota of about 600 million USD. So far, they have given us about 490 million,” he said.
“If Uganda is getting USD600 million, and a country like the USA gets USD one Billion, and they do not need that money, why would the IMF not sit down and say, we know you (USA) have so much as to what is entitled to you per quarter, but Uganda that is suffering has so little…can this money be re-allocated to this poor country,” he explained.
That developed countries received almost 70% of the money the IMF allocated as Special Drawing Rights in 2021 speaks to the lack of fairness in the international financial system.
According to Tumwebaze, those countries don’t basically have the same liquidity needs as developing economies.
According to the IMF, Africa’s debt has been rising over the last decade, with eight African countries facing debt distress and 13 at high risk of debt distress.