The IMF’s $650 billion SDR allocation in 2021 was set at a level that would avoid the need for approval from the US Congress. This was a leading virtue at the time. It was quick!
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The US Congress has rejected the Biden administration’s request to reallocate its SDRs under a new scheme @IMFNews . Here’s a 
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But it wasn’t very well targeted, hence the launch of efforts to reallocate some of those SDRs. Unlike the 2021 allocation, these efforts have not been quick, and they can't be designed to avoid the US Congress, at least when it comes to US participation in the reallocation plan.
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Congress, no doubt mindful that it was avoided in the first instance, has since declined to grant approval in the second instance. Regrettable but not surprising. But I’m going to see the glass half full here. Let me explain why.
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As the SDR reallocation plans took shape at the IMF, under the banner of a new Resilience and Sustainability Trust, the effort moved farther and farther away from the spirit of the original SDR allocation (quick, automatic, no conditions).
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Instead, the RST began to look a lot like, well, the World Bank. Longer term loans for development purposes (“resilience”, “sustainability”!), but with IMF conditionality. It was shaping up to be the worst of both worlds—the efficiency of the World Bank and the charm of the IMF.
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The good news? We already have the World Bank, along with an array of regional development banks. And Congress has done a reasonably good job of funding them in its most recent budget.
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The RST is not dead. But under an optimistic scenario, US support for it will have to wait another year. If the Republicans regain control of the House or Senate later this year, then US support will be effectively dead.
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But let’s stay focused on the positive! The African Development Bank will be replenishing its funds this year. Let’s channel some of the SDR energy toward this replenishment and toward ensuring that Congress fully funds all the MDBs this year.
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This will, however, blow a hole in climate financing for Africa. Can the
@WorldBank quickly scale $100 billion in financing (which the RST would have achieved in short order?).@jedmark888 -
Despite the RST’s flaws, it’s hard to see a positive in this at a time of rising inflation (food prices,), indebtedness and dollar interest rates. Also, US influence
@IMFNews is weakened as China advances its own SDR support for the facility.@ACGeoEcon
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