Ministers of Finance and Central Bank Governors,
We are writing ahead of the third G20 Finance Ministers and Central Bank Governor Meeting on July 15-16 to share with you our key recommendations to defeat extreme poverty now, following up on the results of your first and second meetings held on February 17-18 and April 20 respectively.
As the world continues to address the health impacts of the pandemic for everyone, we must also respond to the multiple crises exacerbated by the pandemic and tackle the underlying, systemic causes of inequity, including addressing the global food system meltdown worsened by the invasion of Ukraine. We are urging you to support the following critical measures in the lead up to this year’s G20 summit:
Unlock Public Financing to End Extreme Poverty
Since the pandemic started, wealthier countries, including those in the G20, accessed more than $16 trillion in stimulus to support their populations and economies. Poorer nations on the other hand did not have such access. The G20 needs to take action that enables low and lower-middle income countries to respond to the pandemic and recover from its multiple effects. We, thus, call on you to support the following critical measures:
Reallocate at least $100B of Special Drawing Rights (SDRs): Last year, the G20 committed to reallocate $100 billion in Special Drawing Rights to countries most in need, yet the aspiration has yet to be fully met. We urge countries to not only meet, but exceed this $100 billion target by reallocating at least 25% of their new SDRs (or an equivalent amount in another currency), by the International Monetary Fund/World Bank Annual Meetings in October 2022. We urge you to maximize the development impact of these funds, using the IMF but also multilateral development banks and the International Fund for Agricultural Development (IFAD), and to make sure these SDRs are additional to Official Development Assistance (ODA).
Make the global tax system work for all: The G20 should ensure that the global tax reforms underway serve all countries by simplifying the rules and reallocating taxing rights of multinationals’ full profits (not just the residual ones) to market jurisdictions, including the poorest countries. This way we can ensure that multinationals pay the taxes they should and not only to their country of residence, but also to all the countries they have clients in — the market jurisdictions that otherwise would lose out in this potentially historic reform.
Pandemic Prevention, Preparedness & Response
The devastating spread and evolution of COVID-19 was exacerbated by a lack of cooperation and political will to act collectively with a decisive and equitable global response. Countless lives were lost unnecessarily as a result.
As hundreds of millions of people in developing countries remain unvaccinated, as systemic barriers continue to surround access to medical technology, and as health systems remain under-resourced and unprepared for the next viral threat, the G20 must heed the lessons of the COVID-19 pandemic and act to ensure it never happens again. We therefore call on the G20 to commit the following:
We acknowledge the intention of G20 countries to establish a new Financial Intermediary Fund (FIF) housed at the World Bank that will be dedicated to addressing the financing gap for pandemic preparedness, prevention. and response. Sufficient, predictable, front loaded, peace-time financing will be crucial to averting the next pandemic threat, but the FIF must be stood up on the basis of equity, accessibility, speed, additionality, and transparency:
- Governance of the FIF should be structured in a way that ensures a fair and equal voice to low- and middle-income countries in terms of decision making and accountability;
- Access to funds must not be subject to unfair or unequal financing terms, or be onerously restrictive so as to prevent access for basic needs related to health system strengthening, primary health care delivery, etc.;
- Financing should be made available to low- and middle-income countries in a timely fashion when needed, especially in the event of a pandemic threat so as to ensure more equitable purchasing power for medical countermeasures;
- The FIF must be structured in a way that avoids duplication in the global health ecosystem, including as it concerns high impact mechanisms like the Global Fund to Fight AIDS, TB, and Malaria, and thus makes the best use of available resources;
- The views and concerns of civil society organizations, especially those in the Global South, must be heard and taken into account in the course of the FIF’s development.
World leaders have repeatedly agreed that diversification of the production of medical countermeasures, such as vaccines, is crucial to preparing for and responding better to the next pandemic threat. This can only be done successfully if scientists and producers across the Global South are empowered and enabled. The G20 should take steps at the national and international level to ensure there are no intellectual property (IP) barriers impeding the development of the WHO-backed mRNA Technology Transfer Hub. This is particularly relevant in jurisdictions like South Africa, where the Hub is based, and ones containing key spokes such as Argentina, Brazil, and Indonesia. It also relates to IP beyond COVID-19 vaccines as the Hub intends to fully leverage the mRNA platform to develop expertise and manufacturing capacity across its spokes to tackle a range of infectious diseases.
Acting on Climate Change & Hunger
Mitigating and adapting to climate change must be a primary focus in the world’s efforts to end extreme poverty. Conflict and climate change are currently among the primary causes of global hunger, which has reached record levels.
By empowering smallholder farmers to weather the impacts of climate change, we can prevent the deepening of the global hunger crisis, which now includes the 500 million people who will face chronic hunger due to the ongoing violence in Ukraine, a main producer of food staples. Decisions made by the G20 must tackle climate change and protect the planet in support of the most vulnerable communities.
Collective action is needed to put an end to fossil fuels. Fossil fuel subsidies must be reinvested in clean, just, and sustainable energy systems, and green recoveries. As a reaction to your February Communiqué, the G20 must commit to concrete plans to phase out fossil fuel subsidies by 2025 or sooner, while providing targeted support to the poorest and most vulnerable.
We call on governments to immediately deliver on the $100 billion per year promise on climate finance through 2025 to help developing countries reduce their emissions, and cope with the effects of climate change. This funding must be delivered through fair share contributions by wealthy countries, and must be new and additional to Official Development Assistance (ODA). In this context, the G20 must recognise the role of the Green Climate Fund in mobilizing critical international climate financing and ensure a full and successful replenishment for 2024-2027.
Significant climate adaptation resources should be allocated to rural communities and smallholder farmers, including through IFAD's Enhanced Adaptation for Smallholder Agriculture Programme (ASAP+). We also call on the G20 to invest in science and research in order to provide evidence and tools for transforming the global food system, reducing poverty, and improving natural resources and ecosystem services. Empowering smallholder farmers now is critical for future resilient and local food systems, and it requires doubling agricultural research investments.
Several billion dollars must be raised to ensure both emergency response across locations at risk of famine and long term investments to prevent future food crises. The initial response by the G7 is only a drop in the ocean. All G20 governments must work to fund a multilateral response to support the UN Global Crisis Response Group (UNGCRG), the International Financial Institution (IFI) Action Plan to Address Food Insecurity, the Food and Agriculture Resilience Mission (FARM), and the Global Alliance for Food Security (GAFS). The coordinated response should ensure famine prevention, including financing the International Fund for Agricultural Development's Crisis Response Initiative (CRI), the World Food Programme, and others. Governments must also stand firm on keeping food and agricultural markets open and guard against unjustified restrictive measures on food and agriculture exports.
We are ready and would be grateful to have the opportunity to discuss these needs further with your team.
Please listen to us and take action! The world is watching.