Proposal To Establish A Resilience and Sustainability Trust

Policy Papers, April 18, 2022

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The challenges from the pandemic, spillovers from geopolitical shocks, and long-standing structural problems pose an enormous impediment for balance of payments stability and resilient and sustainable growth, especially for low-income and vulnerable middle-income countries.
The $650 billion SDR allocation in August 2021 has helped support economic stability by supplementing members’ reserves.
There is scope to amplify the effect of these SDRs by channeling them from countries with strong external positions to countries where the needs are the greatest.

Balance of payments stability is under strain due to pandemic effects, geopolitical shock spillovers, and persistent structural problems.
Low-income and vulnerable middle-income countries face particularly acute risks to resilient and sustainable growth.
SDR resources present an opportunity to reallocate international liquidity toward countries with greater balance of payments needs.

Establishment of a Resilience and Sustainability Trust (RST) to channel SDRs from countries with strong external positions to countries with the greatest needs.
RST would be designed to supplement members’ reserves and amplify the stabilizing impact of the $650 billion SDR allocation.