The G20 should take urgent action to protect poor countries from economic crisis that is forcing 100 people-a-minute into poverty, Oxfam said today.
Developing countries across the globe are struggling to respond to the global recession that continues to slash incomes, destroy jobs and has helped push the total number of hungry people in the world above 1 billion. The economic crisis arrived as poor countries were already struggling to cope high food prices and floods, droughts and food shortages linked to climate change.
Oxfam analysis of economic data has discovered that governments in Sub-Saharan Africa will be $70bn worse off this year as a result of the global slump and unlike rich countries they cannot borrow their way out of trouble. Without outside help governments will find it increasingly difficult to respond to the climate, food and economic crises and to avoid cutting spending on schools, clinics and other anti-poverty programs.
Max Lawson, Oxfam senior policy adviser, said: “Green shoots of economic recovery have not reached the poorest countries which are now suffering severely in the global downturn.
“In the time it takes G20 leaders to tuck into dinner tonight thousands more people will be pushed into poverty and forced to survive on less than $1.25-a-day.
“But despite feeding their own economies a much needed stimulus, the G20 has not yet provided even half the $50bn bailout it promised poor countries in April.”
Oxfam is calling for a $290bn package of measures to ease the burden on developing countries without hitting ordinary taxpayers. The package includes a ‘Tobin tax’ on currency transactions, a debt moratorium and a crackdown on tax havens.
Lawson said: “Existing aid levels are not enough to protect the status quo let never mind reduce poverty in the face of the economic crisis, climate change and rising food prices.
“The G20 has the chance to change the bad habits of the past and come up with new solutions to the problems facing poor people. A currency transaction levy on the banks that helped cause the global slump could bring in $50bn to help those suffering in a crisis they did nothing to cause. It is time bankers paid a bonus to the world’s poor.”
Oxfam is also calling on G20 leaders to fulfil a promise made by President Obama in July to deliver new funds to help poor countries cope with climate change. This funding is vital to break the deadlock in climate change negotiations leading up to the make-or-break UN Summit in Copenhagen in December. Oxfam calculates that $50bn-a-year is needed to help poor countries cope with climate change and another $100bn is needed to help them control their emissions.
David Waskow, Oxfam climate adviser, said: “The clock is ticking on the chances of a fair deal to prevent misery for millions at risk from climate change. It is time for G20 leaders to stand up and deliver the money needed to protect poor people.”
Notes to editors
People falling into poverty:
- The World Bank estimates that 50 million more people will be pushed into poverty, equivalent to almost 100 during every minute of 2009.
- The UN estimates the figure could be as high as 100 million.
How Oxfam’s proposed $290bn package breaks down
Implement a Currency Transaction Tax (CTT) of at least 0.005% on international currency transactions. It is estimated that such a tax could generate a minimum of $30 billion per year if applied to the four major international reserve currencies (US Dollar, Yen, Euro and British Pound). If more currencies were included, this figure could increase as high as $50bn. A slightly higher rate could also provide more resources for government spending in rich countries facing cuts in services.
Transfer half of rich countries’ new Special Drawing Rights allocations. Agree that at a minimum all the G8 and other major donor countries will transfer half of their allotted new allocations of IMF Special Drawing Rights (SDRs) to Low Income Countries. SDRs are a form of IMF quasi currency distributed to member countries. The April G20 agreed to create $285 billion worth of SDRs, and rich nations will receive $177 billion of this amount. Oxfam is calling for half of this, $89 billion, to be transferred to the poorest countries.
Deal with tax havens. Put in place a multilateral agreement for the automatic exchange of full tax information and require country-by-country reporting of subsidiaries, sales and profits by multinational corporations, to help developing countries recoup lost tax revenue. This could result in a further US$160 billion for poor countries, and at the same time would enable rich countries to recover their lost tax revenues. The current OECD initiative on tax havens, supported by the G20, relies on bilateral agreements between countries. To date no developing country has signed a bilateral agreement with a tax haven.
A debt moratorium. Oxfam is asking debt repayment for low-income countries should be cancelled during 2010. They should also not incur additional interest on the debts during this period. This would give these countries approximately $10 billion (total external debt service for LICs in 2007 – the last year with available data – was $9.7bn) which they could instead invest in much-needed services and economic stimulus in their countries. This should be an interim step towards full debt cancellation for all low-income countries that need it.
President Obama’s climate promise. Speaking at the G8 summit in Italy in July, President Obama said: "...we agreed to substantially increase financial resources to help developing nations... We've asked the G20 finance ministers to take up the climate financing issues and report back to us at the G20 meeting in Pittsburgh in the fall."