By Jon Sward, Bretton Woods Project, and Niranjali Amerasinghe, ActionAid USA
Spain hosted the Fourth UN Financing for Development conference (FfD4) in Seville from June 30 – July 3, 2025. Despite searing heat, the conference was an important inflection point for multilateralism, taking place against the challenging backdrop of increased conflict, trade tensions, falling aid from the Global North, and growing calls for a new debt Jubilee for the Global South.
Overall, the summit failed to deliver the transformative system change that is needed for the millions of people being crushed by an escalating debt crisis. However, one outcome that could deliver significant results in the coming years, if North and South countries come together to act, is reform of the International Monetary Fund’s Special Drawing Rights (SDRs), the IMF’s reserve asset.
The conference’s outcome document, the Compromiso de Sevilla (Commitment of Seville), agreed to by member states on June 17, 2025 in the lead-up to FfD4, invites the IMF to develop an ‘SDRs playbook,’ “that provides operational guidance and strengthens the role of SDRs during crises and shocks.”
Together with other key reforms, the SDRs’ playbook could be one piece of the puzzle in creating a fit-for-purpose global financial system for the 21st century—one that responds to the multiple, overlapping challenges we face.
This will require an about-face from Global North countries, which took steps to systematically water down the FfD4 outcome. The US controversially left the FfD4 process just before the adoption of the Compromiso de Sevilla, while the EU and UK blocked key proposed debt reforms.
SDRs – an underutilized tool to address the international monetary ‘non-system’
The Monterrey Consensus, forged at the first Financing for Development conference in Mexico in 2002, aimed to address the Global South’s lack of control over their national currencies – and thus their economic stability and security – due to deregulated capital flows, the highly unequal international currency hierarchy, unregulated transnational financial actors, and higher borrowing costs.
Yet more than 20 years later, we are still living in what Professor Jose Antonio Ocampo has called the international monetary “non-system”, where developing countries must seek to self-insure against external shocks.
In 2021, the IMF provided a crucial lifeline through a general allocation of $650 billion worth of Special Drawing Rights to countries around the world. Within a year, 104 low-and-middle-income countries had utilized these reserve assets, including to buy vaccines, fund public health services, repay their debt, or support their domestic budgets.
However, because SDRs are distributed according to IMF quotas, the majority of the allocation went to the IMF’s wealthiest members: the G7 received nine times more than the entire African continent. While SDRs’ use was progressive, their allocation was regressive.
SDR allocations also require political agreement by the IMF’s board, which significantly delayed the 2021 allocation amid the outbreak of a global pandemic that brought the global economy to a standstill.
In recent years, efforts to “rechannel” SDRs to proposed facilities at multilateral development banks have also been frustrated by European shareholders at the IMF.
SDRs playbook: What’s required to improve responsiveness to developing countries’ needs?
To enhance their effectiveness, SDRs’ role within the wider reserve system must be reconsidered. FfD4’s Compromiso provides a heads-of-State-level mandate to pursue just that.
Potential key reforms advocated for by civil society, economists, and Global South governments include agreeing on automatic triggers for SDR allocations, decoupling future allocations from IMF quotas, and reforming the IMF’s SDR accounting rules to ease their exchange and use for fiscal purposes.
To achieve this, a wider coalition of support for these reforms is needed.
While FfD4 host Spain has enthusiastically backed the creation of an SDRs playbook, and a host of developing countries spoke in support of an expanded role for SDRs in the context of wider international financial architecture reform in Seville, the proposal needs support from a wider cross-section of IMF shareholders, as well as from IMF management, in order to reach the level of ambition needed to have a positive impact on developing countries’ macro-economic stability.
As with other key systemic issues at the IMF, Global North countries have so far failed to deliver both the reforms and actions required to make SDRs more fit for purpose for Global South countries.
Seville must be the beginning of a new chapter. SDRs reform – if done right – can enhance macro-economic stability and support developing countries’ development and climate action, to the ultimate benefit of all.
We can’t wait another decade to embark on serious reform – the IMF’s shareholders must seize the moment.