Addis Ababa, Feb. 6, GNA- President Nana Addo Dankwa Akufo-Addo has called for the channeling of Africa’s quota of $100billion Special Drawing Rights (SDR) through continental financial institutions.
“The IMF should not be the sole beneficiary of such rechanneling. We believe that our own continental institutions such as the African Development Bank (AFDB) and Afreximbank should be recipients of the recycling of these SDRs,” he said.
President Akufo-Addo made the call on Sunday when he presented his report to the 35th Ordinary Session of the Assembly of the African Union in Addis Ababa, Ethiopia, in his capacity as AU Champion for Financial Institutions.
The two-day meeting of the Heads of State was on the theme, “Building resilience in nutrition on the African continent: Accelerate the human capital, social and economic development.”
SDRs are critical financing tool developed by the IMF to support the world’s most vulnerable nations.
They are used by the IMF to make emergency loans for developing nations to shore up their currency reserves without the need to borrow at high-interest rates or run current account surpluses at the detriment of economic growth.
Last May, in Paris, world leaders (G20) made a commitment to allocate the historic SDR 650 billion issuance to IMF Member States, with Africa’s quota allocation of 5 per cent or SDR $33.3 billion to provide the much-needed financial stimulus for post-COVID-19 economic recovery.
President Akufo-Addo told the Assembly that in as much as, “we value this commitment to additional resources of, which our continent is in dire need. It is unfortunate, however, that the only proposal that has been put on the table by the European countries is to re-channel these SDRs through only one institution, the IMF.”
He noted that African Finance Ministers with United Nations Economic Commission for Africa (UNECA) had consistently championed the allocation of SDRs to capitalise AFDB and AfreximBank to help establish an African Stability Mechanism and to initiate a Liquidity Support Facility (LSF) and said it was time that was considered.
“We need to guard against the continuing consequential stranglehold of the rating agencies, which has affected the cost and access to capital markets for African countries, and has, during this COVID period, resulted in the downgrading of many African countries, exacerbating even more their funding challenges,” President Akufo-Addo said.
He urged AU Member States to commit to work collectively to reform the global financial architecture as well as build and strengthen the Union’s financial institutions.