Liberia bought back $1.2 billion in debt today at a 97% discount, “the steepest ever negotiated on developing country commercial debt.”

From the World Bank:

“The deal was concluded with the payment of $38 million to retire 25 outstanding commercial claims. The World Bank contributed half of this money through the International Development Association (IDA) Debt Reduction Facility, and Germany, Norway, the United Kingdom, and the United States contributed the other half.

“The successful resolution of this inherited debt, which had ballooned through interest and penalty charges during a period when my country was wracked by civil war, is an important step on our road to recovery,” said Liberian President Ellen Johnson Sirleaf. “This puts us on a firmer footing to attract investment and accelerate economic growth.”

Expect more from ONE soon on this amazing update.

-Virginia Simmons

Overall, yesterday’s G20 Summit communique has left ONE very hopeful, but as always, with a lot of work on our plates. Below, I’ll quote the very succinct recap by our Global Campaigns Director Roxane Philson, and then I’ll include 3 very short flip camera interviews with some incredible G20 Voice bloggers: Nigerian blogger Sokari Ekine, Richard Murphy of the UK (who was able to ask a question about tax havens to Gordon Brown at his internationally-covered G20 press conference), and Kenyan blogger Daudi Were.

Roxy’s Summary:

“Yesterday’s G20 Summit looks like it made some real progress for the world’s poorest. Caution tells me that some of the vague language will take hard work to clarify, but this morning, as I re-read statements and news from yesterday, I am filled with a sense of hope and optimism.

Highlights include:

Resources: The G20 announced US $50 billion for low-income countries – although we are concerned this includes existing funding – and a further US $100 billion in lending for development banks.

Reform: Developing countries will have greater representation in the international financial institutions and that election to World Bank/IMF leadership will be based on merit.

Regulation: The G20 announced regulation of illicit tax havens.

As with all summits like the G20, we’re left with just as much work coming out of the summit as we had going in. We need to work to ensure that money going to developing countries is given as grants, not loans that trigger another debt crisis. Also, much more needs to be done on the green agenda in the interests of developing countries at the UN Climate Change Conference in Copenhagen later this year.”

And below, short interviews with 3 great global bloggers:

Nigerian Sokari Ekine of the blog Black Looks on attending the 2009 London G20 Summit:

UK Richard Murphy of The Tax Research Blog on asking a question on tax haven reform to British Prime Minister Gordon Brown at the internationally-covered G20 press conference:

Daudi Were, who lives in Nairobi, Kenya, and blogs at Mental Acrobatics blog, on the outcomes of the G20 Summit.

Attending the 2009 London G20 Summit as an accredited member of the media was absolutely the opportunity of a lifetime. I just want to publicly thank Karina Brisby, Shane McCracken, Samantha Bronnar, and everyone who put the G20 Voice project together and made it possible for 50 bloggers from around the world to attend this historic global summit. I hope it’s only the beginning for allowing new independent voices, particularly those from from the developing world, into these critical global discussions. I also want to thank our own Weldon Kennedy for handling all of ONE’s G20 Voice project work from the UK.

-Virginia Simmons

Yesterday the World Bank released a report projecting a GDP slowdown in developing countries. The report projects growth at 2.1 percent in 2009—down considerably from 5.8 percent in 2008. This is less than half the World Bank’s November 2008 projection of 4.4 percent.

Excerpts below, full report here.
………………..

Across the developing world, we see that conditions of recession are affecting the poorest people, making them even more vulnerable than before to sudden shocks—but also reducing opportunities available to them, and frustrating their hopes,” said Justin Yifu Lin, World Bank Chief Economist and Senior Vice President, Development Economics “This could reverse years of progress, and is nothing less than an emergency for development.”

In the update, the Bank emphasized that even though growth should rebound—albeit slowly—economic activity will remain depressed, with unemployment and significant sectoral adjustment persisting for the next two years.

“Even if global growth turns positive again in 2010, output levels will remain depressed, fiscal pressures will mount, and unemployment levels will rise further in virtually every country well into 2011,” explained Hans Timmer, Manager, Global Trends, in the World Bank’s Development Prospects Group.

…………

-Chris Scott

A World Bank report released on 8 March projects that global GDP will decline this year for the first time since World War II. The new report revised earlier estimates that emerging markets would sustain and grow the world economy even as the economies of developed countries contracted. The report was released ahead of the G20 finance ministers’ meeting to be held in London later this week. The report predicts that developing countries face a financial gap of $270-$700 billion caused by the global recession, and warns that even at the lower end of this range, international financial institutions such as the World Bank and IMF cannot by themselves currently cover the shortfall that includes mounting public and private debt and trade deficits.

The report also highlighted earlier analysis that poverty (people living below $1.25 per day) will increase by around 46 million people in 2009 (and by 53 million for those living below $2 per day), caused by adverse effects on employment and wages as well as slowing remittance flows. The crisis will be a major setback to the progress towards the Millennium Development Goals, as the long run consequences of the crisis may be more severe than those observed in the short run. For example, when poor households withdraw their children from school, there is a significant risk that they will not return once the crisis is over, or that they will not be able to recover the learning gaps resulting from the missed months or years of school attendance. The World Bank also warns that infant deaths in developing countries may be 200,000-400,000 per year higher on average between 2009 and the MDG target year of 2015 than they would have been in the absence of the crisis, according to its preliminary analysis.

The report concludes that stabilization, protecting longer-term growth and development, and protecting the vulnerable will be the main challenges for developing and emerging market countries, but pursuing these objectives requires significant resources which low income countries lack. As a response to the crisis, the World Bank is calling on developed nations to dedicate 0.7% of the money they spend on stimulus programmes (the G20’s announced fiscal stimulus collectively amounts to almost $1 trillion for 2008 and 2009 as of end of January, with a further $650 billion in 2010) toward a Vulnerability Fund to help developing countries absorb the shock of the financial crisis. Some G20 countries such as the UK have expressed interest in this idea, but to date, none of the countries has committed to it. The upcoming G20 finance ministers’ meeting will be an important moment to discuss this proposal.

-Mikiko Imai

The Partnership for Maternal, Newborn, and Child Health (PMNCH) and the World Bank co-hosted a seminar last Wednesday on how to achieve MDGs 4 and 5 through strengthening health systems and increasing international and domestic financing for key maternal and child health interventions. MDG 4 calls for a two-thirds reduction in child mortality, and MDG 5 calls for a three quarters reduction in maternal mortality and increased access to reproductive health services. Countries are off-track to achieve these MDGs, and there has been almost no progress in reducing maternal mortality in Africa. Seminar participants discussed how to jump-start progress through more effective and efficient financing.

Financing for health systems has been dwarfed in recent years by financing for infectious diseases. While some progress has been made in the prevention and control of diseases like HIV, tuberculosis, and malaria, too many women and children in poor countries still die every year of diseases that are no longer issues in the wealthier world. The global community is now increasing its attention on building health systems in developing countries to maximize and sustain investments in infectious diseases and to address the root causes of poor maternal and child health.

The High-Level Task Force on Innovative International Financing for Health Systems is at the center of global efforts to estimate the resource needs to strengthen health systems and define the mechanisms that can accomplish this goal. Launched in September 2008 and co-chaired by World Bank President Robert Zoellick and UK Prime Minister Gordon Brown, the Task Force has among its members high-level policymakers from key donor and recipient country governments. Operating under the premise that more aid is necessary – but better aid is absolutely critical – the Task Force has two working groups estimating the global price tags and country-level costs of achieving the MDGs. A key emphasis of the ongoing work is on the right mix of innovative financing mechanisms to deliver aid more effectively and efficiently. Accountability for funding and the results it achieves is high priority for donors, recipient countries, and civil society. The Task Force will deliver the results of the working groups at the G8 meeting in July, including recommendations on the appropriate mix of financing mechanisms to strengthen health systems and ultimately improve maternal and child health outcomes.

-Lisa Fleisher

Monday saw the beginning of the two-day UN food summit, held in Madrid, where top officials from countries and institutions like the World Bank gathered to discuss the global food crisis. The summit was an opportunity to strategize about addressing the food crisis – particularly for poor countries – as the excerpts below describe.

ONE’s Eloise Todd was at the summit, and will be reporting about the outcomes shortly on the blog.

Excerpts below, full article here

World Bank Managing Director Ngozi Okonjo-Iweala, who is leading a delegation to the two-day meeting starting on Monday, said more resources and attention are needed to help the poor.

“Food prices are now volatile and that factor, combined with the impact of the financial crisis, only serves to heighten the challenges confronting the developing world,” Okonjo-Iweala said in a statement.

“We expect high price volatility to continue and it will hit the poorest the most, as they spend half their income on food. More needs to be done as we must ensure those who are vulnerable get the assistance they need.”

Okonjo-Iweala said while food prices have fallen they are are still higher than, say, just three years ago. And in some countries, prices have not fallen as sharply as in others.

-Beth Adler

Today in a New York Times op-ed, Robert Zoellick, president of the World Bank, calls for President Obama to lead the U.S. in enabling developing countries to weather the financial crisis. Specifically, Zoellick calls for Obama to use the April G20 global summit meeting as an opportunity to pledge 0.7 percent of the U.S. stimulus package to a vulnerability fund designed to assist developing countries who cannot afford bailouts and deficits. Obama should then encourage other developed countries to do the same.

“The United States could begin by pledging some $6 billion of its own $825 billion stimulus package — just 4 percent of what was provided to American International Group. With this modest step, the United States would speed up global recovery, help the world’s poor and bolster its foreign policy influence.” says Zoellick. Developed countries contributing 0.7 percent of their gross national income (GNI) for official development assistance (ODA) will fulfill the long-standing U.N. target that has been frequently re-pledged by the developed world, including at the Monterrey conference in 2002.

With an estimated 100 million additional people pushed into poverty by the financial crisis, decreasing foreign direct investment (FDI), and declining exports, developing countries need help now. The vulnerability fund will assist countries in establishing safety-net programs like food-for-work programs and seed and fertilizer projects. In addition, it will help countries invest in infrastructure projects, like building roads, which both create jobs and prepare a country for productivity and growth. The fund will also assist small and medium enterprises that are often worst affected by such crises because they neither access credit, nor do they get bailed out.

Developed countries have stepped up in the last year, calling for increases in aid and supporting programs that assist the developing word. But it is not enough, as Zoellick stresses, “Poor people in Africa should not pay the price for a crisis that originated in America. The total aid from developed countries is about $100 billion a year, a modest sum in light of developing countries’ needs. The United Nations target for aid is 0.7 percent of an economy. The United States contribution is about 0.2 percent, although polls consistently show the American public is willing to contribute much more.”

-Beth Adler

I know that you have all been eagerly awaiting ONE’s analysis of the G20 economic summit that took place this past Saturday. To re-cap, in October, President Bush called for a first-ever meeting of the G20 to discuss solutions to the global financial crisis, and mechanisms to prevent future crises. The G20 is a group of finance ministers from the world’s leading economies (the G8, the European Union and Australia), as well as a group of ten emerging economies including Argentina, Brazil, China, India, and South Africa. After the summit, officials issued a communiqué detailing their resolutions. Here are a few highlights:

1. Developing Country Representation: The G20 calls for better representation of developing countries – both emerging economies and poor countries – in the Bretton Woods Institutions like the IMF and World Bank, in order to accurately reflect the world economy and increase the legitimacy and effectiveness of these institutions. The G20 calls for these reformed institutions to play a role in identifying future crises and responding to them.
2. Trade: The G20 rejects the impulse to turn to protectionist measures to stabilize their economies and promises to refrain from raising new barriers to trade or investment in the next 12 months. The G20 also calls for a successful completion to the World Trade Organization’s Doha Round trade talks.
3. Official Development Assistance (ODA): Considering the impact of the financial crisis on developing countries, and particularly on the most vulnerable in those countries, the G20 countries reaffirm the importance of the Millennium Development Goals (MDGs) and their development assistance commitments. They urge all countries to undertake commitments consistent with their capacities, and re-iterate the principles agreed upon at the UN Conference on Financing for Development that took place in Monterrey in 2002 that emphasize country ownership of and mobilizing all sources of financing for development.
4. Anti-Corruption: (more…)

Here are a handful of articles we rounded up about this weekend’s G20 summit:

The Economist looks at this weekend’s G20 meeting, saying that while the rules of the global financial system cannot be rewritten in a five-hour powwow, some useful things can come out of the meeting, such as commitments on trade and on reforming the IMF.

Ban Ki-moon has appealed to leaders meeting at a financial summit in Washington this weekend not to let the global crisis become a “human tragedy” for people in poor countries. In a letter to leaders of the G20 Ban said, “The poorest and most vulnerable everywhere, but particularly in the developing countries, will be the most affected” by the world growth slowdown now being predicted. We need most of all to join forces to take immediate action to prevent the financial crisis from becoming a human tragedy.”

In Great Britain, Gordon Brown has called for a new international financial architecture, citing the Bretton Woods conference in 1944 as an example. The Bretton Woods agreement, which resulted in the creation of the IMF and World Bank, is particularly relevant today as we address the “need for global policy co-ordination in tackling” this financial crisis.

The New York Times editorial board today examines some of the challenges that confront the G20 during America’s presidential transition. The Times champions the need for all the participating 20 of the world’s leading economies to reach fundamental agreements as a platform to “begin a serious discussion about the roots of the financial crisis and set the stage for future meetings to discuss substantive reforms.”

-Steve Wilson and Chris Scott

Beyond Wall Street and Main Street here in the U.S., experts are also warning that the financial crisis will have repercussions on streets throughout the developing world. Growth in sub-Saharan Africa is expected to slow, inflation is on the rise, and the effects of the food and fuel crises will likely be exacerbated. These developments could have serious implications for the world’s poorest people – the World Bank estimates that the rise in food prices alone could push at least another 100 million people into poverty, equivalent to seven years lost in the fight against poverty.

This Friday, President Bush will host leaders from the G20 in Washington D.C. to address the financial crisis, with an aim to identify mechanisms to deal with the current situation and implement measures to ensure that future crises are avoided. Discussions will include the question of reshaping global financial governance and imposing greater regulation on the global financial sector. As the New York Times reports, European leaders are pushing for “…regulation, “or at least oversight,” of all financial institutions, accountability and transparency, new approaches to risk assessment…” in addition to a central role for the IMF. While some have likened this meeting to a second Bretton Woods – the post-WWII gathering of Allied Forces that created global monetary bodies like the IMF and World Bank – the adjustment of existing institutions and policies seems a more likely outcome of the summit than the establishment of new institutions.

The G20 is a group of finance ministers from the world’s leading economies (the G8, the European Union and Australia), as well as a group of ten emerging economies including Argentina, Brazil, China, India, and South Africa. Many are hoping that the attendance of some developing countries indicates that the challenges facing poor countries in light of the current crisis will be high on the agenda. Questions include how to protect poor communities from the impacts of the crisis, how countries can prevent losing recent gains made in combating poverty, and how the developing world – who is the most vulnerable – can be shielded from such crises in the future. While the inclusion of emerging economies at the meeting is an important step towards prioritizing development on the international economic agenda, many are doubtful that the G20 group will be able to establish guidelines that will benefit the developing world in the long-run.

The meeting is a precursor to the Doha international trade and development talks scheduled for the end of the month. ONE will be sending a team to Doha, so keep your eyes peeled for future posts about important outcomes from the meeting.

-Beth Adler