Global economic recovery in peril unless G20 Finance Ministers step up for vulnerable countries
Ahead of the G20 Finance Ministers meeting on Friday, the ONE Campaign warns that the global economic recovery is in peril unless all countries have the means to control the pandemic and build back their economies.
With the global economy set to lose $22 trillion between 2020 and 2025, and the pandemic threatening to push up to 160 million people into extreme poverty this year, the anti-poverty organisation urges the G20 Finance Ministers to not stand idle on solutions that can help make the biggest difference.
David McNair, Global Policy Executive Director at the ONE Campaign, said:
“G20 Finance Ministers face a Herculean task this week. Our whole economic ecosystem is still reeling from this sustained attack. It will take years to rebuild unless there is a concerted global effort.
“In leading the charge to kick-start a post-COVID-19 recovery, Finance Ministers must show the same ambition and urgency they put into their national responses and support a robust economic response package for vulnerable countries. Their first item of business should be a new allocation of $650 billion in IMF Special Drawing Rights (SDRs*). This would provide countries with a vital financial lifeline needed to fight the pandemic, fund vaccine rollout and restart their economies, and would also help limit the human toll of the crisis.”
Notes to editors
- * Special Drawing Rights are a type of international reserve asset issued by the IMF that can be converted to hard currency. Allocated based on the size of a country’s economy, they are a useful tool to shore up liquidity and address foreign exchange shortages in a global emergency. For instance, in the wake of the 2008 financial crisis, the IMF allocated $250 billion in SDRs, which raised global reserves by 3%, including a raise of low-income countries’ reserves by 19%.
- ONE is calling on the G20 to back the largest injection of public capital in decades – an economic lifeline and survival fund in the form of a new allocation of $650 billion in Special Drawing Rights (SDRs). Further, ONE is also advocating for wealthier countries to transfer their unused SDRs so that more vulnerable countries can access them if needed.
Key Facts for journalists
- While G20 countries have agreed to suspend debt repayments from vulnerable countries, which has freed up around $5.7 billion for these countries in 2020, international leadership hasn’t delivered anywhere near enough. Multilateral institutions such as the World Bank and private lenders must do more and we will keep up pressure on them throughout next year.
- Sub-Saharan Africa fell into recession for the first time in 25 years, with economic growth contracting by at least 3% in 2020, the worst on record. For many countries, a return to 2019 economic growth levels will not occur until 2022–24.
- The World Bank and the IMF estimate that Africa is facing external financing needs of about $1.2 trillion for 2020-2023, with roughly half of this expected to be used to service debt.
- COVID-19 could push between 143 and 163 million people into extreme poverty—those living under $1.90-a-day—around the world in 2021.