This year alone, as a result of the economic crisis, between 50-100 million more people will be trapped in poverty, scraping by on less than US$1.25 a day. This means millions more families forced to make impossible choices between buying life saving medicines, or the cost of sending their girls to school, or finding food for the next week.
The G20 in April this year promised to provide US$240 billion for developing countries to help them deal with the impact of the economic crisis and as part of this, US$50 billion to the world's poorest countries. This is a great first step and must be fully delivered. But this financing alone will not be enough to help the world's poorest countries weather the storm. A second set of bold actions is required from the G20 when its leaders meet in Pittsburgh later this month.
In sub-Saharan Africa alone, the World Bank estimates between $30 and $45 billion in 2009 is necessary to cope with the impact of the economic crisis. And, the World Bank predicts overall that developing countries will need between $352 billion and $635 billion in 2009. This is what is required just to stand still; much more is needed beyond this to actually enable these countries to develop and fight other crises such as HIV and AIDS, rising food prices and climate chaos.
Oxfam believes that with three steps, the G20 can generate US$280 billion of new financing for the world’s poorest countries, at minimal cost to themselves; in fact they also stand to benefit significantly from taking these steps.
G20 Finance Ministers meeting in London this weekend must:
- Implement a Currency Transaction Tax (CTT) of at least 0.005% on international currency transactions. It is estimated that such a tax could generate a minimum of $33 billion per year if applied to the four major international reserve currencies (US Dollar, Yen, Euro and British Pound).
- Transfer half of rich countries' new Special Drawing Rights allocations. Agree that at a minimum all the G8 and other major donor countries will transfer half of their allotted new allocations of IMF Special Drawing Rights (SDRs) to Low Income Countries.
- Deal with tax havens. Put in place a multilateral agreement for the automatic exchange of full tax information and require country-by-country reporting of subsidiaries, sales and profits by multinational corporations, to help developing countries recoup lost tax revenue.
