The G20 Finance Ministers meeting in Venice is a vital opportunity to build on the work of the G7 but also urgently address some of the shortfalls in what was agreed in Cornwall a month ago. As with the G7, the G20 must focus on “vaccinating the world” - to counter a potentially endless flow of new variants destroying lives and livelihoods over the next few years, and “greening the world” - to deliver a new generation of good clean jobs which can counter two trends at the same time climate change and youth unemployment.
We welcome the G20 themes of People, Planet Prosperity – and looking ahead to the G20 summit, we call on PM Mario Draghi, Finance Minister Daniele Franco and the other G20 leaders and finance ministers to: firstly, make the IMF’s promised new issue of Special Drawing Rights available as soon as possible and define a clear path forward for their maximal re-allocation and on-lending. Secondly develop a wider green clean recoveries investment partnership package which is properly financed, co-developing with emerging and developing countries innovative, fair and equitable financial solutions that can ensure their integration into the global financial infrastructure, address debt vulnerabilities and unlock far more financing for green investments. Lastly, we urgently need to address the rising global vaccine inequity and support efforts to establish regional vaccine manufacturing hubs. As the developed world is steadily reaching its vaccination goals, Africa braces for a third COVID-19 wave, as short-term vaccine supplies dry up leaving many countries unable to even follow up with second doses for high-risk groups.
To fight diverging economic trajectories and protect lives and livelihoods, here’s the action required in more detail.
First, mobilizing more and better private and long-term finance and investment to ensure a green recovery remains central to the G20’sPeople Planet Prosperity agenda. Yet, timely, stable and sufficient long-term financing on fair terms for an inclusive and sustainable post-covid recovery remains out of reach for many developing countries. In this context we are encouraged by G20 and G7 leadership in facilitating a new issuance of $650bn in SDRs. But none of these funds are available for investment yet. The urgency now is to accelerate the disbursement of these SDRs to forestall the current emerging market liquidity crisis devolving into an insolvency crisis. We also call on the IMF to publish the steps for disbursement of SDRs and define the modalities for re-allocation and on-lending, including plans to replenish critical facilities such as the PGRT. A successful G20 and COP26 hinges on the availability to upfront finance to change the development trajectory towards a ‘clean and green’ development model. Investment in energy, in food security and the protection of nature and biodiversity are the most effective ways to create jobs and jump-start a green recovery. It is therefore crucial for the G20 summit to be unequivocal about this.
Secondly, and building on the above, the recent G7 communique does not sufficiently address the debt vulnerability and investment gaps faced by many middle-income countries struggling with the aftermath of the pandemic, and who were already facing a heavy burden due to climate change. We, therefore, call on the G20 summit to support a new investment approach that prioritizes mutually reinforcing partnerships between advanced and emerging economies, providing new sources of liquidity and investment that help countries fulfil direly needed SDG-aligned commitments and programmes and run more transparent financial systems.
To make this a reality, we need to work more closely with the private creditors to scale up affordable financing for critical SDG-enabling investments in infrastructure, energy and digitalization. To this end, we request that you consider on-lending at least $30billion worth of SDRs to a new Liquidity and Sustainability Facility (LSF) and the African Stability Mechanism to catalyse investments to Africa, reduce the liquidity premia on sovereign bonds offered by middle-income countries and incentivize green and sustainability-linked investments. Akin to the European Stability Mechanism, the African Stability Mechanism will protect the continent against external shocks by providing instant emergency access to financial assistance for countries in financial difficulty. It is a moral imperative that SDRs are channelled towards a “green and clean” recovery and avoid a business-as-usual scenario.
Finally, we welcome the commitment by the G7 to provide 870 million doses, but smart pandemic management demands urgent improvement on the offer of about 435 million to be delivered by the end of this year. For example, in June alone there was a 290m shortfall in vaccine supply. We really need 1bn doses donated in the next few months. We are encouraged by support for manufacturing in low-income countries and your acknowledgement of the positive impact of voluntary licensing in increasing the global supply of vaccines. However, with less than 1 percent of our population fully vaccinated, and several African countries in the grips of a third wave, we call on the G7 and G20 to expedite the delivery of these vaccines.
We face extraordinary threats, and opportunities, together. With our partnership promises renewed, with innovations spurring us forward, we are confident that we can stop the endless threat of new covid variants, an unsustainable increase in poverty and the constant threat of new climate change impacts – by building forward together towards achieving our shared sustainable development goals.
Her Excellency Mrs Zainab Shamsuna Ahmed (Nigeria finance minister)
His Excellency Mr Adama Coulibaly (Ivory Coast finance minister)
His Excellency Nicolas KAZADI (Democratic Republic of Congo finance minister)
His Excellency Ken Ofori-Atta (Ghana finance minister)