Special Drawing Rights (SDRs) allocation is a mechanism used by the International Monetary Fund (IMF) to provide its member countries with additional reserve assets. SDRs are a type of international currency that can be used to supplement a country’s official reserves or for international transactions. Countries could immediately use a new allocation of SDRs for debt relief, to import life-saving necessities, and to support key public services. In many cases, SDRs provide important financial support without being converted to hard currency. They help reduce capital flight balance of payments deficit and fiscal crises. These additional reserves can also lower countries’ borrowing costs1 (Centre for Economic Policy Research, 2022).

This research is part of the Capacity for Economic Research and Policy making in Africa (CERPA) programme.