Ministers of Finance and Central Bank Governors,
We are writing ahead of the second G20 Finance Ministers and Central Bank Governor Meeting on April 20, to share with you our key recommendations to defeat extreme poverty now, following up on the results of your first meeting held on February 17-18.
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 now 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:
Reallocating at least $100B of Special Drawing Rights (SDRs): Last year, the G20 committed to reallocate $100B in SDRs to countries most in need. We urge countries to not only meet, but exceed this $100B target by reallocating at least 25% of their new SDRs (or an equivalent amount in another currency) by the IMF/WB Spring Meetings to ensure more resources go to the countries that need them most. Support provided by donor countries to Ukraine should be additional and not a diversion of these funds from structural needs in the least developed countries (LDCs) and low and middle income countries (LMICs).
Support provided through reallocated SDRs needs to be in addition to the 0.7% official development assistance (ODA) target. As the International Monetary Fund establishes the new Resiliency and Sustainability Trust (RST) to channel SDRs to the countries that need them most, we urge you to ensure the RST avoids conditionalities that force trade offs with vital social protection and spending; caps the interest rate at .05% or less; and is decoupled from existing IMF loans and programs.
Building on your February Communiqué, we encourage you to recycle SDRs also through multilateral development banks (MDBs) such as the African Development Bank.
Ensure corporations pay their fair share of taxes: COVID-19 has shown that we need to tap into new, additional revenue sources for global solidarity financing. New taxes should ensure that sectors that have traditionally benefited from globalization actually contribute to tackling shared challenges caused by it. This could include for instance a global financial transaction tax (FTT), which could be introduced by a group of vanguard countries, with revenues earmarked for global health, and climate change. Additionally, a carbon tax, which would have the dual benefit of helping to reduce carbon emissions while raising new revenues that can be directed to support mitigation and adaptation efforts globally, especially in lower-income countries where it is more expensive to do so. However, the tax rate should be ambitious enough to actually bring down emissions and prohibit mass carbon credit purchasing.
Financing the Global COVID-19 Response
While G20 countries have pledged to meet the World Health Organization's (WHO) target of at least 70% of people in every country receiving primary vaccination by mid-2022, a comprehensive plan backed by commitments is still lacking. We call on the G20 to commit to concrete measures to achieve the 70% goal including:
Fully funding the Access to COVID-19 Tools Accelerator (ACT-A): With already weak health systems and lack of access to predictable, sustainable supply of in-demand vaccines, lower-income countries have faced an uphill battle getting doses into arms. G20 countries must contribute their fair share to ACT-A and the broader global COVID-19 response, especially by frontloading funds to UNICEF and Gavi, the Vaccine Alliance, to support in-country delivery of COVID-19 vaccines, as well as tests, treatments, and PPE, and to support risk communication and community engagement to promote uptake.
We look forward to knowing the report on modalities to establish a financial facility for pandemic preparedness and response to be discussed by you at this meeting, towards its expected adoption in October by you and G20 Health Ministers.
Acting on Climate Change and 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, we strongly believe that the G20 members policy mix toward carbon neutrality and net zero should include a full range of fiscal, market, and regulatory mechanisms including the use of carbon pricing mechanisms and incentives, and phase out fossil fuel subsidies by 2025 or sooner and commit to achieving this objective, while providing targeted support to the poorest and most vulnerable.
Following up to your February Communiqué, we call for concrete actions to enable transition finance to support orderly, just, and affordable transitions towards a low-greenhouse gas emissions and climate-resilient economy.
The G20 should outline specific steps toward establishing net zero financial systems and supporting international convergence. Significant commitments to net zero financial systems were made by G20 members at COP26. These should now be followed by an indication of specific next steps to be taken towards this goal, including the development of private sector climate transition plans, sustainability disclosures, and interoperable taxonomies of sustainable and unsustainable investments. G20 members should also commit to adopting the recommendations of international standards setting bodies to establish an international alignment, convergence, and equivalency regime for key climate-related financial regulations. The creation of common standards in international forums will help to shore up the rules-based multilateral order while also facilitating the efficient flow of private and public capital to net zero purposes.
We call on governments to immediately deliver on the $100B 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). Thus, previous years’ shortfalls in this funding must be filled, and a consistent and transparent finance reporting system needs to be implemented. In reaction to your February Communiqué, we stress the importance of meeting that goal fully immediately. This finance must be evenly split between support for mitigation and adaptation, adjusting the current imbalance in which approximately only one quarter of funds is currently devoted to adaptation, and the additional funding needed to close the gap should be primarily through grants; while any loans must be concessional.
This must include channeling significant climate adaptation resources to rural communities and smallholder farmers, for example through meeting the International Fund for Agricultural Development’s (IFAD) 12th replenishment and supporting IFAD’s Enhanced Adaptation for Smallholder Agriculture Programme (ASAP+) program. Empowering smallholder farmers now is the key to building resilient, local food systems in the future. We also call on the G20 to invest in science and research to provide evidence and tools to transform the global food system, reduce poverty, and improve natural resources and ecosystem services, for instance through CGIAR.
G20 countries must pave the way for a significantly more ambitious post-2025 finance goal to be agreed upon at this year's COP, co-created with developing countries and climate vulnerable communities to sufficiently address their needs.
The world is facing a significant humanitarian crisis as a result of the triple threat of conflict, climate change, and COVID-19, which is causing unprecedented levels of starvation and food insecurity, which will get worse as the crisis in Ukraine threatens to disrupt global food aid accessibility (Ukraine being a main supplier to WFP) and global food distribution chains. Governments must work to meet the required $183.5 million for urgent food and agricultural livelihoods assistance in Ukraine and fill critical funding gaps required for immediate response to prevent famine across the globe, including fully financing the World Food Programme’s Immediate Response Account (IRA), as well as meet the $7 billion needed to reach the 45 million people on the verge of starvation.
Please listen to us and take action! The world is watching.