G20 09 Interaction Policy Brief

Samuel Worthington, President and CEO

G20 Policy Brief

March 2009

The G20 and the Global Economic Crisis

W

e appreciate that industrial countries are working to resolve the global economic crisis while also focusing on the world’s poorest citizens in supporting the Millennium Development Goals (MDGs). However we are deeply concerned that the global economy and financial systems have failed to deliver stable growth but have instead continued to tolerate high levels of poverty and inequality. On our present course we face a catastrophe that will ultimately result in substantial economic, social and environmental damage. We call upon the governments of the G20 to design and implement a recovery plan which defends decent jobs and public services for all, addresses the environmental challenges we face, mitigates the human cost of the crisis, and protects the poorest including poor women, while promoting sustainable growth that protects the planet.

We urge you to take the following actions: 1. G20 countries need to provide additional funding to allow for increased financial resources to help poor countries mitigate the financial crisis. a. G20 Countries should provide additional funding either directly to poor countries or to the International Financial Institutions (IFIs1 ) for redistribution. b. Developing countries need to have immediate access to the emergency funds necessary to pursue counter-cyclical policies2 which are in effect in many of the G20 countries. 2. The G20 countries need to establish a transparent accountability mechanism to monitor decisions, pledges, and disbursements agreed to at the Summits. 3. The IFIs need to use innovative mechanisms for a rapid disbursement of the funds3 while protecting recipient countries from pro-cyclical policy4 conditionalities. Funds must be disbursed within a year. a. Aid must be free from the policy conditionality that would limit their ability to respond to the crisis. b. The World Bank, IMF and regional development banks all need to be employed in the effort. 4. The G20 should ensure financial institutions and markets are held publicly accountable and are adequately regulated. This should include provisions to address the activities of hedge funds, “vulture funds” and “off the balance sheet” transactions, as well as measures to control tax havens. We urge the G20 to take bold measures to address the deepening global economic crisis in support of international social justice. InterAction is the largest alliance of U.S.-based international development and humanitarian NGOs. With over 175 members operating in every developing country, we work to overcome poverty, exclusion, and suffering by advancing social justice and dignity for all. 1

The IFIs include the World Bank, International Monetary Fund (IMF), and the regional development banks in Africa, Asia, Latin America, the European Bank for Reconstruction and Development (EBRD) and others.

2

Counter cyclical policies are government policies aimed at reducing or neutralizing anti-social effects of economic cycles. Such policies encourage spending during downturns, and tighten credit during inflationary periods.

3

The World Bank’s Global Food Response Program is an example of a quick disbursing program.

4

Pro-cyclical policies of government increase the business cycle by discouraging spending during down turns, for example tightening credit, and encouraging spending during up turns.