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	140 organizations urge IMF to approve new SDR allocation for poor nations facing crises by GCAP, Crisis Group, ITUC, CEPR, agencies   Oct. 2022   Dear members of the IMF Board of Governors and Executive Board:   We, the undersigned organizations, call for a major new general issuance of at least $650 billion worth of debt-free Special Drawing Rights (SDRs) by the International Monetary Fund (IMF).   The great majority of the world’s countries are struggling amid multiple historic, overlapping, and generally worsening crises. The world’s wealthiest countries must act quickly to assist them by voting for a major new issuance of SDRs.   As Pakistan’s central bank governor recently wrote, if rich countries do not act soon, “Poor countries will not easily forget how they were let down by a system that was meant to increase their living standards and protect them in an emergency.”   Even as the COVID-19 pandemic continues to kill thousands of people each week, and to infect millions more, low- and middle-income countries — many of which lack sufficient COVID vaccines — now face food, energy, and cost-of-living crises driven by the war in Ukraine, corporate profiteering, and price-gouging.   Climate disasters, and a rapidly warming planet, worsen these crises and create new ones, while looming debt crises threaten many countries — driven in part by interest rate hikes by the U.S. Federal Reserve and by other central banks in advanced economies that are making it much more expensive for borrowing countries to pay back their debts.   The enormity of these overlapping crises may be unprecedented in human history. The World Food Programme estimates that the number of people facing acute food insecurity has risen from 135 million to 345 million since 2019; in 2021 2.3 billion people in the world faced moderate or severe food insecurity according to a United Nations report.   The IMF has downgraded its projections for global economic growth, with 2022 growth expected to slow to 3.2 percent, down from 6.1 percent last year. The UN Development Programme estimated that by July of this year, the rising cost of living had pushed an additional 71 million people into poverty.   Mass anger triggered in part by these crises has fueled instability in many countries, even leading to the toppling of governments; more countries are likely to be rocked by political instability as daily life becomes more difficult.   SDRs have already proven to be an effective tool in responding to global challenges like these. Last year’s allocation was an important lifeline to many low- and middle-income countries facing major economic challenges, and whose populations are more exposed to multiple vulnerabilities.   Over 100 low- and middle income countries used SDRs in the first year after the August 2021 allocation; 42 of which exchanged most of their SDRs for hard currency, around $16 billion worth, and 69 of which included SDRs totaling over $80 billion in their government budgets or for other fiscal purposes.   While we support reforming how SDRs are allocated to better target vulnerable countries, including advancing a much-needed IMF quota reform, without the SDRs from last year’s issuance, many countries would likely be faring much worse today, and would be even less equipped to respond to the new crises that have emerged in 2022.   In Africa, 47 of 54 countries used the newly allocated SDRs in some way, and many countries used SDRs to directly respond to the pandemic by purchasing vaccines, for economic recovery purposes, by supporting social programs, or other means. Even those developing countries that did not use their SDRs to pay off debts or purchase vaccines benefited from the added security of strengthened foreign reserves.   But as important as these SDRs were, they failed to match the scale of the needs of developing countries even then; and the situation is significantly worse now. A major new allocation of SDRs is the most direct and efficient response to assist countries around the world in responding to these new crises, and to shocks yet to come.   A new allocation of at least $650 billion would immediately make hundreds of billions of dollars available to nearly all low- and middle-income IMF member countries without debt or conditions and only requires political will on the part of the Fund’s board; particularly those members, like the U.S., Japan, China, Germany, and France, that have the largest voting shares at the IMF.   A new issuance would also help wealthier countries and the entire global economy by boosting demand for imports, thereby helping to create new export jobs among trading partners.   Allowing vulnerable developing countries to succumb to hunger, debt, and cost-of-living crises, on the other hand, would dramatically increase the risk of social conflict and deeply undermine global security. Ensuring global economic stability requires collective action.   Supporting a new issuance of SDRs would be an easy way to assert global leadership, prove responsive to the needs of the developing world, prevent political unrest, and help support an equitable global economic recovery from this moment of dire need.   SDRs are a simple and effective way to deliver essential economic support to the great majority of countries around the world, at once. They do not cost the IMF member governments anything; nor do they contribute to inflation.   The International Chamber of Commerce; the UN Global Crisis Response Group on Food, Energy and Finance; the UN Economic Commission for Africa; UN Secretary-General António Guterres; the African Union; dozens of members of both chambers of the U.S. Congress; leading economists; and many more, have called for a new major SDR allocation to help provide relief and support an equitable global economic recovery.   The global crises confronting humanity extend well beyond COVID-19 and some, most notably the climate crisis — with its effects on food production and availability of water, and attendant disasters, including droughts, floods, wildfires, worsened hurricanes, landslides, and other calamities — pose an existential threat to human survival.   We can’t afford to wait any longer to take action. The urgent and compounding crises around the world call for an urgent and proportionate response. SDRs are a crucial part of that response.   * Open letter to IMF calling for new SDR allocation: http://bit.ly/3CieFyE   http://www.reuters.com/article/imf-worldbank-reserves/imf-should-issue-new-reserves-to-help-countries-tackle-overlapping-crises-groups-idUSL1N3162Q7 http://cepr.net/report/special-drawing-rights-the-right-tool-to-use/   July 2022   U.S Democrat Lawmakers back call of Global Crisis Response Group to “immediately support” the issuance of at least $650 billion in Special Drawing Rights (SDRs), a cost-free reserve asset distributed by the International Monetary Fund (IMF) to address urgent needs.   A new SDR issuance would provide urgently needed resources for developing countries to address the “combined international crises” of an ongoing pandemic and alarming increases in food insecurity and poverty.   In a letter to President Biden and Treasury Secretary Yellen, the lawmakers cite a doubling of those facing acute food insecurity globally (345 million), billions who remain unvaccinated against COVID-19, emerging debt crises, and declining economic growth in the developing world.   They cite the success of last year’s SDR issuance, which allowed at least 99 developing countries “to stabilize their currencies, shore up reserves, pay off debts, and finance health care, such as vaccinations, and other urgent needs.”   Support for an even larger issuance of SDRs enjoys broad support in Congress, with the House having voted in favor of authorizing new SDRs for developing countries last year. Through unilateral action, the Biden Administration can support an issuance of an additional $275 billion for low income and developing countries.   The UN Global Crisis Response Group recently echoed congressional support, arguing that “all available rapid disbursement mechanisms at international finance institutions must be reactivated, and a new emission of Special Drawing Rights must be pursued.”   The U.S. lawmakers conclude: “It is currently in the power of the administration to immediately act in support of a $650 billion new SDR issuance for global relief.”   * Letter to The White House, U.S. Department of the Treasury: http://bit.ly/3B7fYS8   http://progressives.house.gov/2022/7/cpc-chair-jayapal-and-senator-warren-lead-lawmakers-in-calling-for-biden-administration-to-support-cost-free-aid-to-developing-world http://cepr.net/us-treasury-should-act-now-to-help-hundreds-of-millions-of-people-hit-by-war-and-hunger/ http://cepr.net/report/special-drawing-rights-the-right-tool-to-use/ Visit the related web page
	85% of the world’s population to live in the grip of austerity by Eurodad, Financial Transparency Coalition, Oxfam   Oct. 2022   85% of the world’s population will live in the grip of stringent austerity measures by next year - Eurodad, Financial Transparency Coalition   A new report End Austerity: A global report on budget cuts and harmful social reforms shows that 85 per cent of the world’s population will live in the grip of austerity measures by 2023. This trend is likely to continue until at least 2025, when 75 per cent of the global population (129 countries) could still be living under these conditions.   Austerity measures include scaling down social protection programs for women, children, the elderly and other vulnerable people, leaving only a small safety net for a fraction of the poor; cutting or capping the wages and number of teachers, health and local civil servants and eliminating subsidies; privatising or commercialising public services such as energy, water and public transport; and reducing pensions and workers’ rights.   Civil society organisations from across the world are launching an #EndAusterity campaign today to fight back against the wave of austerity that is sweeping across the world, supercharging inequality and compounding the effects of the cost-of-living crisis and climate breakdown.   Isabel Ortiz, Director of the Global Social Justice Program at the Initiative for Policy Dialogue, and co-author of the report, said: “Decisions on budget cuts affect the lives of millions of people and should not be taken behind closed doors by a few technocrats at a Ministry of Finance, with the support of the IMF. Policies must instead be agreed transparently in a national social dialogue, negotiating with trade unions, employer federations and civil society organisations. Austerity cuts are not inevitable, in fact our report presents nine financing alternatives that are available, even to the poorest countries.”   Making matters worse, a second report also launched today at the #EndAusterity Festival found that, despite this austerity wave, one-third less Covid-19 recovery money was spent last year compared to 2020, falling from 3.9 per cent of GDP to 2.4 per cent of GDP, due to the worsening economic situation.   The report by the Financial Transparency Coalition and partners entitled Recovery at a Crossroads: How Countries Spent Covid-19 Funds also found that only 37 per cent of Covid-19 recovery funds in 21 developing countries analysed went to urgent social protection measures. Meanwhile, big corporations benefited from 39 percent of funds, which does not take into account tax waivers, corporate loans, and credit lines where they are not accounted for in the budgets.   In the meantime smaller businesses only received 20 per cent and informal workers 4 percent of the total. Women have been particularly affected, since despite being hard hit by the pandemic, they only received half as much support as men.   Matti Kohonen, director of the Financial Transparency Coalition, said: “Despite the cost-of-living crisis, governments in developing countries, often with their hands tied by international financial institutions, are putting big corporations ahead of the people. Nearly 40% of Covid-19 recovery funds went to big companies, meaning that those most impacted by the pandemic have been left behind. We should promote a people-centered recovery with progressive tax policies instead of cutting social protection and support for the most vulnerable.”   Civil society organisations will kickoff the #EndAusterity campaign with a series of virtual events from Wednesday 28th September until Friday 30th September, bringing together high profile academics and civil society activists to outline the problems with, and people-centered alternatives to, austerity. They include taxing corporate excess profits, eliminating illicit financial flows, canceling and restructuring sovereign debt, and increasing coverage of social security and employer’s contributions, as well as issuing new IMF Special Drawing Rights targeted to developing countries. http://bit.ly/3LQFzC5   * Report End Austerity: A global report on budget cuts and harmful social reforms: http://bit.ly/3UMRQvz   Oct. 2022   2022 Commitment to Reducing Inequality Index, report from Oxfam, Development Finance International   Many of the world’s poorest countries have cut health spending during the last two years, sometimes to make debt repayments to rich creditors, according to a report by Oxfam that shows inequality between rich and poor nations worsening during the coronavirus pandemic.   Analysis of national budgets across 161 nations found that despite the biggest global health emergency in a century, half of low- and lower-middle-income countries cut health spending, while almost half cut their welfare budgets and almost three-quarters cut education spending.   Oxfam said the 2022 Commitment to Reducing Inequality Index found that rich countries, including the UK, “exacerbated an explosion of economic inequality” by overseeing demands by lenders for huge debt repayments while the pandemic ravaged annual spending plans.   As finance ministers gather in Washington this week for the International Monetary Fund (IMF) and World Bank annual meetings, Oxfam said developing nations were facing “a global economy that is making it ever more difficult to meet the needs of their population”.   The charity accused the IMF of exacerbating economic inequality and poverty in poor countries by insisting on new austerity measures to reduce debts and budget deficits.   Oxfam and Development Finance International said analysis of data from the IMF showed that three-quarters of all countries were planning further cuts to public spending over the next five years, totalling $7.8tn (£7tn).   In the fourth edition of the index, Oxfam ranked governments on their commitment to reducing inequality. Areas covered include public services and welfare protection, taxation and workers’ rights. Policy commitments are also held up to scrutiny to test their implementation and their impact on inequality.   Katy Chakrabortty, Oxfam’s head of policy, said: “The index exposes how governments around the world are not only failing to reduce rising inequality – many are also deliberately choosing policies that will profoundly disadvantage the poorest for years to come.   The report said that in 2021, lower-income countries spent 27.5% of their budgets on repaying their debts – “twice the amount that they have spent on their education, four times that of health and nearly 12 times that of social protection”.   China and other lenders outside the Paris Club of institutions that have historically dominated lending to developing countries play an increasingly important role in financing loans.   However, banks based in the US, UK, France, Germany and Switzerland are also the beneficiaries of debt repayments that have crippled the finances of developing world countries.   Matthew Martin, director of DFI, said: “The debate has catastrophically shifted from how we deal with the economic fallout of Covid-19 to how we reduce debt through brutal public spending cuts and pay freezes. With the help of the IMF, the world is sleepwalking into measures that will increase inequality further.   “For every dollar spent on health, developing countries are paying four dollars in debt repayments to rich creditors. Comprehensive debt relief and higher taxes on the rich are essential to allow them to reduce inequality dramatically.”   http://www.oxfamamerica.org/press/press-releases/new-index-shows-governments-worldwide-stoked-an-inequality-explosion-during-covid-19-pandemic/ http://www.oxfamamerica.org/explore/research-publications/the-commitment-to-reducing-inequality-index-2022/ http://www.theguardian.com/inequality/2022/oct/11/half-of-poorest-countries-have-cut-health-spending-despite-covid-says-oxfam http://www.dw.com/en/governments-doing-little-to-fight-rising-inequality-post-covid-says-report/a-63398706 Visit the related web page
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