The IMF will allocate the Special Drawing Rights among its member states based on their quotas, which are determined by the size of a country’s economy and its role in the global economy. Therefore, about 60% of these funds will go to rich countries that do not need them. African countries will receive $33.6 billion, with the lion’s share going to the five largest economies on the continent – South Africa, Nigeria, Algeria, Morocco and Egypt. The IMF and many countries recognise that this division of the new resource is both inequitable and inefficient. They are talking of creating a mechanism for reallocating some of the funds – an amount of $100 billion is mentioned – to developing countries. If done effectively, the reallocation could help African countries deal with COVID-19, climate change and their many other economic and social challenges. It is also an opportunity for African countries to begin reforming their relationship with the IMF. But this will require them taking the initiative to ensure that the reallocation mechanism is fully responsive to African needs and is accountable to Africans.
SOURCE: THE CONVERSATION