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G20 mixed bag gives grounds for scepticism

By Andrew Hewett - posted Wednesday, 15 April 2009

It is increasingly clear that while the global economic crisis is hitting developed countries like Australia hard, it is crashing through the borders of poor countries with ever-greater severity. Indeed, the World Bank has estimated that an additional 200,000-400,000 infants a year will die as a result of this crisis.

The recent G20 Summit decisions and declarations were, as could be expected, a mixed bag for people living in poverty. There’s much to give hope to developing countries. But there are also some worrying trends and a real test with delivery. And regrettably here, there are grounds for scepticism.

Importantly there was an acknowledgement at the summit that the crisis is hurting poor people. The leaders declared: “We recognise that the current crisis has a disproportionate impact on the vulnerable in the poorest countries and recognise our collective responsibility to mitigate the social impact of the crisis ...”.


The Summit announced a US$1.1 trillion boost for the global economy including a trebling of the International Monetary Fund’s resources, at least an additional US$100 billion in lending by the Multilateral Development Banks and US$250 billion for trade finance.

How much of this will go to developing countries? The communiqué promises that US$50 billion will be dedicated to low income countries - a tremendous amount. But it is vital that it is new money - not just recycled promises, and that it is disbursed quickly, is highly concessional and comes with no harmful conditions attached.

Commitments to boost aid spending have, importantly, been reaffirmed. But many G20 countries are already failing to meet their pledges to boost aid, and some, like Italy, are cutting their aid budgets.

Prime Minister Rudd’s commitment to boost aid by 2015 to 0.5 per cent of Gross National Income is important. The degree to which aid spending is protected in next month’s budget will be a real test of this commitment going forward.

The great winner out of the Summit is the International Monetary Fund (IMF) - and that’s worrying.

The Fund has been given a virtual blank cheque but vitally needed reform to its governance and policy approach remains just a promise, with very little detail attached. There’s a real danger of a return to the bad old days when a dominant IMF imposed mistaken policies on a succession of recession-wracked developing countries.


The G20 Communiqué also reaffirms a commitment to ending protectionism. But according to the World Bank, 17 out of the 20 G20 members have introduced protectionist measures in the last four months.

The most damning indictment was the lack of concrete action to tackle climate change - indeed in a massive missed opportunity this pressing crisis was largely ignored.

There are, however, four steps which could help lead to a fairer new world order:

  • an end to harmful conditions imposed by the IMF in return for money given to poor countries;
  • accelerated reform of the World Bank and the IMF, to give a great voice to developing countries;
  • the immediate personal engagement of G20 Heads of Government in pressing for global climate change deal; and
  • a multilateral agreement requiring automatic disclosure of financial information to developing countries.

The opportunity for a fair and just response to this crisis is there. Whether the leadership is present, and prepared to look beyond our own backyards, is the vital question.

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About the Author

Andrew Hewett is Executive Director of Oxfam Australia.

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