France and Japan have pledged their support for the African Development Bank’s initiative to utilize IMF Special Drawing Rights (SDRs) for climate and development purposes, as announced by the COP28 presidency in a statement on Monday.
Special Drawing Rights (SDRs) are international reserve assets held by the International Monetary Fund (IMF) for emergency purposes, and they have been infrequently employed, with some exceptions during the Covid-19 pandemic.
Allowing SDRs to be channeled towards development banks can potentially strengthen climate finance efforts in emerging economies.
The SDR roundtable at COP28, builds on outcomes of the Africa Climate Summit held in Nairobi, Kenya in September 2023, at which African leaders called for concrete, time-bound action on the proposals to reform the multilateral financial system and including the channeling of SDRs to Africa, including through institutions such as the African Development Bank which will be able to leverage the SDRs by three to four times.
African leaders also called for the formation of a group of SDR donors to expedite this channeling ahead of COP28.
