SEATTLE, Washington — Global disasters have always claimed the attention of the entire world. Events such as the COVID-19 outbreak have brought suffering to millions of people at no fault of their own. As with most disasters, it affects the world’s poor the most due to a lack of resources, money, or attention. However, there is hope. The United States is uniquely positioned to provide relief to many afflicted groups across the world. In fact, there is a little known but highly effective method to give disaster aid from Congress via the International Monetary Fund. This special aid can ease the tensions of global disasters like COVID-19 on the world’s poor.
The International Monetary Fund, or IMF, is a global financial organization. Its sole purpose is in ensuring the international monetary system that countries and individuals rely on maintains solvency and remains steady. To achieve this goal, the IMF conducts surveillance on nations’ financial wellbeing and advises on ways to improve if needed. They also provide loans and other financial assistance to help with monetary issues beyond the scope of simply giving counsel. This particular ability includes the use of Special Drawing Rights, or SDRs, that bolster wavering countries’ reserve systems.
SDRs and Disaster Relief
SDRs are uniquely suited to assist in global crises such as the COVID-19 pandemic. They are purely a reserve currency that the IMF’s member nations allocate and save for times of need as financial systems falter. For example, they were used during the 2008-2009 financial crisis to great effect for the economies most afflicted. In the era of COVID-19 with world economies staggering and people suffering, both people and countries sorely need an SDR allowance.
How Congress Can Help
Congress is in a key position to provide disaster aid. They are integral in authorizing the SDR’s release. Based on IMF rules, Congress has a large stake in voting over the use of SDRs as foreign aid. Therefore, it is up to them and the Secretary of the Treasury to determine if they are necessary. However, Congress needs to vote on the authorization amongst themselves first.
To do so, Congresspeople can introduce bills to committees such as the Senate Foreign Relations Committee and House Financial Services Committee. For example, Congressmen are making efforts to open the use of SDRs to IMF member nations to aid with COVID-19 related troubles. Both Senator Durbin and Representative Garcia of Illinois introduced bills to the Senate and House to initiate the allocation of funds from wealthy nations to poorer countries in order to assist with their COVID-19 response and bolster their economies.
The Value of Using SDRs
There is an immensely positive outcome of using SDRs to aid in a crisis. They stabilize the economies of poor nations who need help by allowing the trade of an SDR for their currency. This ensures that the nation can continue to help its citizens with medical assistance, rebuilding efforts, or other aid without a looming economic collapse. This also ensures that trade between nations remains uninterrupted by ensuring countries can still process transactions. This means that people employed across manufacturing, agriculture and other industries can keep their jobs, which helps prevent those in poorer areas from sliding further into poverty.
Additionally, this aid provides support to those who desperately need it at no cost to the U.S. taxpayer. It is essentially disaster aid from Congress with no strings attached. Therefore, the use of SDRs benefits both U.S. citizens and the world’s poor. Imports and exports can continue to provide money for companies both here and abroad. Additionally, individuals can continue to receive their pay so they can purchase much-needed goods or services.
All in all, the use of SDRs as a form of disaster aid from Congress is an extremely effective and easy way to save millions of lives. With enough support, Congress will be more likely to vote to authorize the use of SDRs to deal with crises. SDRs can provide poor nations with an easy source of aid that gives their citizens all of the resources they need to survive and thrive after a disaster. All the U.S. has to do is say yes to disaster aid from Congress.
– Domenic Scalora