Campaign group ONE today welcomed commitments to the world’s poorest countries in the G20’s final deal, but warned that funds announced for them must not create a new debt crisis.

“The G20 have come up with impressive numbers; it’s what they do with them now that counts”, said Oliver Buston, Europe Director for ONE. “Is the US$50bn announced for Low Income Countries grants or loans? To fight the crisis, Africa needs new effective aid on top of existing promises, not expensive loans.

“Thanks to Gordon Brown’s leadership, the world’s poorest have not been forgotten, now their participation in international talks needs to grow”, he said.

ONE supporter Bob Geldof said:

“The implications of this meeting at first glance seem far-reaching. Clearly the regulatory and management regime to operate a new global financial architecture are beginning to be put in place. We will have to wait and see whether the amounts committed to reviving the global economy are adequate. “But the key point for the 50 per cent of the planet who live on less than two dollars a day must be that they have finally been brought in from the margins to the centre of the decision-making process. A key question the African delegation is asking is whether this will be real new money for their countries, and will it be grants or expensive loans? In this perhaps obscure but critical difference lies the economic health of the continent of Africa and of its people and by extension our own.”

ONE has been calling on the G20 to wrap the poorest countries into global recovery plans through a package covering resources, reform and regulation, both for humanitarian reasons, and because it will benefit the world as a whole.

Resources: ONE has been calling for an immediate US$50bn stimulus package for sub-Saharan Africa, as well as for aid promises to be kept and ‘frontloaded’.

The G20 announced US$50bn for Low Income Countries as a whole.

This would include:

• US$6bn in lending raised by the sale of International Monetary Fund (IMF) gold reserves. This is a good start but more can be done through further off-market gold sales for the poorest countries, to be brought forward at the Spring Meetings of the IMF and World Bank later this month in Washington DC.
• Expansion of a ‘trade finance’ package, money to get goods moving again.
• A US$19bn allocation of ‘Special Drawing Rights’ or SDRs to the poorest countries, approximately US$1bn of which is for sub-Saharan Africa from a total global package of US$250bn.

 

The deal also included an extra US$100bn in lending from multilateral development banks. We need further clarification about how much of this will be available for the African Development Bank which has urgent immediate needs for unfunded infrastructure projects.

Reform: The G20 announced that developing countries would have greater representation in the international financial institutions and that election to World Bank/IMF leadership would be based on merit. The latter is a welcome breakthrough if it means citizens of any country can apply.

Regulation: The G20 announced regulation of illicit tax havens. A litmus test of this initiative would be how many stolen assets are repatriated to developing countries as a result.

The human impact of the global financial crisis unfolds daily across Africa and urgent action is needed to follow up these commitments:

In April: At the Spring Meetings of the World Bank and IMF the degree of concessionality and exact size of the countercyclical package for Africa should be clarified and maximized. Gold sales and SDRs can both be further explored to see if there are possibilities of further benefits for African and other developing countries

In May: At the African Development Bank meetings in Dakar, Senegal in May there must be a major boost in capital for concessional programs.

June/July: At the G8 Summit in Italy the donors should agree to do more on agriculture and health, offer accountable annual timetables for delivery on aid packages towards the Millennium Development Goals, explore a carbon finance package for development, and agree a trade reform package which truly makes Doha a development round.

In December in Copenhagen the world must agree a package to help the poorest both adapt to climate change and be a part of the global solution.