Dáil Éireann Debate, Tuesday - 5 December 2023
191. Deputy Darren O'Rourke asked the Minister for Finance about Ireland's special drawing rights and their reallocation; how have they been reallocated; if they can be used as a means of debt cancellation and funding for loss and damage; and if he will make a statement on the matter. [53268/23]
View answerSpecial Drawing Rights (SDRs) are an international reserve asset that was created by the International Monetary Fund (the IMF) in 1969. SDRs are not a currency but their value is based on a basket of five currencies with one SDR currently equivalent to approximately €1.22.
The IMF has allocated SDRs to its member countries in the 1970s (in response to a marked decline in world reserves, concern about increasing trade restrictions and to deal with changes in the international monetary system), in 2009 (in the context of the global financial crisis) and in 2021 (in response to the unprecedented global health and economic crisis). In total SDR 660 billion (equivalent to circa €800 billion) has been allocated of which circa 70% was allocated in 2021.
Ireland has been allocated SDR 4.1 billion (equivalent to circa €5 billion) of which SDR 3.3 billion (equivalent to circa €4 billion) was allocated in 2021. These SDRs are held by the Central Bank of Ireland, where they form part of our external reserves.
Countries can lend (or "channel") SDRs to IMF funds (such as the Resilience and Sustainability Trust or the Poverty Reduction and Growth Trust). This allows the IMF funds to provide low-interest/longer-term loans to countries in need. Under EU law, Ireland cannot channel SDRs to other entities such as multilateral development banks.
The loans provided by the IMF funds could be used by recipient countries to service debt obligations, fund climate measures etc. While of significant benefit, these loans are not considered a means of debt cancellation or funding for loss and damage.
My Department is currently appraising the potential for Ireland to channel SDRs to IMF funds.
