Together with other international civil society organisations, Global Citizen is calling for a redesign and upgrade of the world’s financial system. In a world rocked by crises, trillions that could be spent on addressing climate change, biodiversity loss, spreading hunger and conflicts, and investment in robust health and food systems, are instead being lost to inefficient systems no longer fit for the 21st century. A redesign by G20 finance ministers in 2024 is essential for our common future.
Dear G20 Finance Ministers,
Finance For Our Future – For The Win
Thanks to Brazilian leadership, and building on recent Indian, Indonesian, and Italian G20 legacies, we have an excellent emerging agenda for finance action in 2024. We now have an exciting and historic opportunity, on your watch, to upgrade our global public financial system and deliver a win-win financing plan for people, nature, and planet, capable of urgently unlocking the additional 2-3% of global Gross Domestic Product (GDP) needed for low and middle-income countries (excl. China) by 2030. Do not miss this chance. This sum is equivalent to global military spending and delivers co-benefits for security and sustainability, as well as rebuilds trust and solidarity. By delivering these positive investment flows through open, accountable, and science-based financing arteries, you will help tackle transnational threats like climate change, biodiversity loss, pandemics, cost of living crises, and spreading hunger and conflicts while helping scale exciting innovations such as in health, renewables, sustainable agriculture, and digital public goods.
This upgrading of our shared public finances is essential to proving that multilateralism can deliver win-wins for everyday citizens south and north. Today, too many citizens fear the future. This plan fuels hope for our common future, starting with these steps by the G20 Finance meeting in April:
- Be activist shareholders of our shared global public banks by instructing our Multilateral Development Banks (MDBs) to urgently and fully implement the Capital Adequacy Framework (CAF) recommendations made by the G20 Independent Expert Group, in particular: increasing quality lending by lowering the equity to loan ratio further and by using their “callable” capital more efficiently; scaling the use of concessional finance and catalytic instruments such as guarantees to mobilise more private capital; improving access to affordable finance at the local level, especially for job-creating Small and Medium-size Enterprises (SMEs) in developing economies; improving access to finance at the local level; streamlining operations and making MDBs more responsive to their clients and citizens, including through increased global south representation; and by engaging creatively with responsible private finance. MDBs should fully align with the Paris Agreement and significantly scale financing for renewable energy as indirect and direct funding for fossil fuels is phased out. MDBs should also fully align with the Kunming-Montreal Global Biodiversity Framework. To help with this, establish a credible rapid MDB reform tracking system so shareholders and citizens can hold MDBs accountable for coordinated, efficient action as one whole MDB system. Subject to significant progress on improving capital efficiency and operational speed, scale and quality reforms, the G20 shareholders should support a general capital increase for the highest performing MDBs, to help them treble lending by 2030 and significantly increase private capital mobilisation from below 1X to higher multiples.
- Support an historic International Developement Assistance (IDA) replenishment for the World Bank's “global solidarity fund” on the way to a trebling IDA by 2030. This financing must be made more accountable to the citizens for whom it is intended and must come from additional Overseas Development Aid (ODA) increases to avoid cuts to other core lifesaving and climate action accounts.
- Maximise the impact of Special Drawing Rights(SDRs) for the Sustainable Development Goals (SDGs) by supporting and scaling the recycling of SDRs via the MDBs such as the African Development Bank, the Inter-American Development Bank, and the International Fund for Agricultural Development and lay the track for a new non-inflationary SDR as a key tool to advance a Just Transition to Net Zero issuance before COP30. To help accelerate the innovative use of SDRs, the G20 should launch a working group involving central bankers to explore and advance these and other options.
- Acknowledge and address deep debt distress. Global policymakers at the International Monetary Fund (IMF) and across the G20 must grasp that hundreds of millions of citizens are right now paying the price of deadly debt service levels in terms of lost health, education, humanitarian, and lifesaving services. This is systemic: we are currently witnessing a systemically dangerous failure to invest in Africa's demographic youth boom and climate action. Debt servicing and debt sustainability analysis must allow space for these investment imperatives. To this end, the G20 must commission an urgent review of the G20 Common Framework while endorsing the Nairobi Declaration to suspend debt repayments for those countries with liquidity problems, backing borrowers’ clubs, and building on the Expert Review on Debt, Nature and Climate. All MDBs and bilateral creditors should implement debt treatment, cancellation where it is needed and pause clauses for natural disasters and health crises for new and existing loans. Private creditors can be brought to the table through legislation where needed. All new and restructured loans must be open to citizens for scrutiny and trackable against country-owned SDG KPIs. Our fair and future-proof financial architecture for the 21st century can and will be far better at independently and transparently balancing the interests of creditors and debtors while unlocking far more financing for our future.
- Unlock additional quality grant financing at scale to address climate adaptation, hunger and loss and damage. The G20 must follow through on its 2009 commitment to phase out inefficient fossil fuel subsidies and redirect the funding for climate and development action at home and abroad. G20 members should support the new tax taskforce, which will explore and propose initiatives to tax highly polluting and undertaxed sectors and high-net-worth individuals to ensure they contribute their fair share in addressing global challenges. For example, according to the EU Tax Observatory, a 2% tax on billionaires' wealth would raise $250bn a year.
High-income countries need to improve the tracking of and fully meet their pre-existing SDG, climate, and nature financing commitments. Specific imminent 2025 targets, such as doubling adaptation finance, $100bn a year for climate action and $20bn a year for nature action, must be met. Partners should publish comparable, timely, and verifiable data to verify this delivery. To ensure these precious grant funds are used most effectively, all funding mechanisms must be independently reviewed and compared for outcomes according to independent effectiveness criteria. The G20 also must support an ambitious, well defined and structured New Quantified Collective Goal for climate finance beyond 2025, to be agreed this year, with clear subgoals for the different types of financing sources and instruments, with a balanced allocation for adaptation, resilience, mitigation and loss and damage. A new transparent tracking system which monitors additionality and coherence with other development financing flows must also be implemented for credible delivery.
It is not too late for this decade to 2030 to still be one of delivery and opportunity. For too many people on our planet, it has so far been a decade of disaster, polycrisis, and peril. With these steps, you can help shift our shared narrative from one of fragmentation, fear and austerity to one of shared hope, opportunity, abundance- and build momentum for further systemic results-oriented reform.
You are driving the G20 finance process on the 80th anniversary of the birth of the Bretton Woods system. On your watch, the world demands a redesign and upgrade of our creaking old financial system so that together, we can tackle the threats of today and finance a fairer future into the 21st century.
Signed,
Global Citizens