Maryknoll Office for Global Concerns joined a letter with over fifty other organizations calling on President Biden and Treasury Secretary Yellen to support a new allocation of Special Drawing Rights (SDR) to counteract clear recessionary pressures in the global economy.
Read this letter as a PDF
April 6, 2023
Dear President Biden and Secretary Yellen,
We are writing to request that the United States’ representative at the International Monetary Fund (IMF) use her voice and vote to support a new allocation of Special Drawing Rights (SDR) to counteract clear recessionary pressures in the global economy.
Many economists believe that the Federal Reserve’s and other central banks’ continuing interest rate hikes could push the U.S. economy and the world into a downturn. International financial institutions have warned that 2023 will be a “tougher” year, with many developing countries suffering a “sharp, long-lasting slowdown” that could “cause poverty rates to rise.”
Recessions are both costly and deadly. With the Congressional Budget Office projecting stagnant growth, a global recession this year would depress demand for American exports, which would lead to the potential loss of millions of American manufacturing jobs. Recession would also result in a “sizeable and highly significant increase in mortality” in emerging economies, especially children’s mortality, according to research from the Bank for International Settlements. According to this econometric research, the number of lives lost in developing countries from a world recession could be in the millions.
One of the few tools to mitigate the risks of recession at home and abroad that is available to your administration without Congressional action is to support a new issuance of SDRs at the IMF. Previously, the August 2021 issuance proved to be a lifeline for developing countries enduring the Covid-induced global economic downturn, enabling over 100 countries to repay debts, avert balance of payments crises, and purchase lifesaving imports like food and vaccines.
A new issuance of $650 billion in SDRs does not require additional Congressional action; costs U.S. taxpayers nothing; reduces the frequency and impact of crises, as well as economic downturns, around the world; addresses significant causes of social and political unrest; and boosts U.S. exports. The latter creates jobs for American workers.
Already, nearly 150 civil society organizations support a new issuance of SDRs, including the AFL-CIO, International Chamber of Commerce, Oxfam, International Crisis Group, Partners In Health, as well as dozens of members of Congress; the UN Global Crisis Response Group on Food, Energy, and Finance; the UN Economic Commission for Africa; UN Secretary-General António Guterres; the African Union; leading economists; and many more.
A new issuance of SDRs would be good for the world and good for America. It would save lives and livelihoods around the world and in the United States.
We urge you to commit the Department of Treasury to supporting this zero-cost measure at the next Executive Board meeting of the IMF to make an enormous difference for our own citizens and people around the world.
Read the list of signatories here. Photo of the World Bank main entrance