Senator Warren, Representatives García, Norcross, Beatty, Jayapal, Lead Colleagues to Urge Biden Administration to Support Aid for Crisis-Hit Countries

Letter

Dear President Biden and Secretary Yellen,

We write to urge the Administration to support a new allocation of the International Monetary
Fund (IMF)'s Special Drawing Rights (SDRs), which would bolster the world economy and
protect American jobs at zero cost to U.S. taxpayers.

The interdependence of the global economy was laid bare by the COVID-19 pandemic, and over
the past year has been further demonstrated by the consequences of Russia's illegal invasion of
Ukraine. The IMF recently issued its worst 5-year forecast for the global economy in three
decades. In July, the Fund projected that the world economy will grow by just 3 percent this year
and in 2024. World trade growth is expected to decline and to remain well below the average of
the past 20 years.

IMF Managing Director Kristalina Georgieva, who first proposed a "sizable" SDR allocation in
March 2020, has once again been emphasizing the serious need for international reserves in lowincome countries, as part of a "global safety net" to protect their economies from collapse if
exposed to shocks. She points to the increasing risks from pandemics, climate disasters, and war,
as well as economic and political fragmentation.

Downturn and recession around the world would eliminate many export-related jobs in the
United States and reduce growth and employment here. From January 2020 to May 2021, the
U.S. economy lost an estimated 2.2 million export-related jobs due to the fall in global demand
for U.S. exports as a result of the pandemic and recessions in many countries. While some of
these jobs have since been recovered, a global downturn could reverse this recovery, potentially
threatening the livelihoods of millions of U.S. workers.

A new SDR issuance would create more than $200 billion worth of international reserves for
developing countries not including China, helping to stabilize global economies and U.S. export
markets and therefore preserve and create U.S. jobs that would otherwise be lost to a global
recession. Crucially, SDRs have zero cost to the U.S. federal budget or taxpayers.

In August 2021, the U.S. supported the IMF's issuance of $650 billion worth of SDRs. This
measure was by far the single most important action taken to support the economies of
developing countries in the face of combined global health, debt, economic, and climate crises.
The amount of assistance received by developing countries from this SDR issuance was more
than all of the development aid from high-income countries to developing countries over the
span of a year. And unlike much of the other aid, it added no debt or conditions to the recipient
countries.

In the first year after the allocation, over 100 low- and middle-income countries used their SDRs
in some form, including to stabilize currencies and avert balance of payments crises, to repay
debts to the IMF, and to purchase critical imports such as food, vaccines, and personal protective
equipment, including from the United States. According to the IMF's recent two-year ex post
assessment, the 2021 issuance "continues to benefit the global economy" and did not contribute
to global inflation. Based on the Bank for International Settlements' research on the relationship
between mortality and global recession, the 2021 issuance very likely saved hundreds of
thousands of lives.

Notably, this issuance did not benefit countries that are subject to financial sanctions or whose
governments are not recognized by the IMF: Afghanistan, Belarus, Iran, Myanmar, Russia,
Sudan, Syria, and Venezuela have not been able to use a single SDR from the 2021 issuance.
Cuba and North Korea are not IMF members and are therefore ineligible for SDRs. And China
has over $3 trillion in foreign reserves and therefore could not use SDRs under current IMF
rules.

A new issuance of SDRs can be seen as an insurance policy for the U.S. as well as the rest of the
world, and your administration can take effective action on its own by supporting a new issuance
of SDRs at the IMF.

Leading your administration now to support a new issuance of at least $650 billion in SDRs is a
simple, cost-free, and effective way of saving many export-related jobs--including
manufacturing and union jobs--in the U.S., while saving many lives in developing countries and
mitigating the effects of a global slowdown. SDRs are a readily available and effective tool in
your economic policy toolbox--we urge you to use it.

Sincerely,

Source