IMF Special Drawing Rights (SDRs) have provided critical relief for countries in times of financial crisis. Yet the IMF’s own analysis shows that lower-income countries are being short-changed by the current method of SDR allocations, which are distributed proportionally according to IMF quota shares, a system that systematically under-represents the world’s most vulnerable nations. As countries face compounding crises, the central question is: how to design SDR allocations so they better align with the reserve needs of all IMF members, not just the wealthiest.
In July 2025, the Fourth UN Financing for Development (FfD4) conference in Seville, Spain, reached a landmark heads-of-state agreement recognizing the need to reform the International Monetary Fund Special Drawing Rights. The conference’s outcome document, the Compromiso de Sevilla, invites the International Monetary Fund to develop an “SDRs Playbook”, operational guidance to strengthen the role of SDRs during crises and shocks. This paper examines the weaknesses of the IMF’s current approach, traces their implications during the landmark 2021 allocation, and assesses proposals for making SDR allocations more effective for developing countries.
Key findings
- The 2021 allocation revealed a fundamental inequity. Although $650 billion in SDRs were issued – the largest allocation in IMF history – less than half reached low-and middle-income countries. IMF staff acknowledged at the time that reserve levels in many low-income countries would “remain well below their adequacy ranges” even after the allocation.
- High-income countries receive the most, but benefit the least. Advanced economies, which hold the largest IMF quota shares, received the majority of the 2021 allocation but had limited use for those SDRs. Meanwhile, 41 out of 45 Sub-Saharan African countries used their allocations within a year to buy vaccines, fund public health, pay debt, or support domestic budgets.
- SDRs’ rechanneling has largely failed to fill the gap. Despite a G20 commitment to rechannel $100 billion in SDRs to developing countries, disbursements have been
Ambitious reforms to the SDRs system could help address overlapping climate, debt, and inequality crises in a manner aligned with climate and economic justice principles, while delivering dividends to all countries through enhanced macroeconomic stability.