Page 19 - Nile Explorer Issue 007

to translate expressions of international
solidarity into concrete action:
First, a $1 trillion liquidity injection; a
kind of helicopter money drop for those
being left behind through reallocating

 ˆŽ‘’ existing special drawing rights at the
International Monetary Fund and
‚ adding a new allocation that will need to
go considerably beyond the 2009 alloca-
tion made in response to the global

financial crisis.
W population living in developing response to an unprecedented crisis, Second, a debt jubilee for distressed
economies. An immediate debt stand-
ith two-thirds of the world’s This represents an unprecedented
still on sovereign debt payments should
countries (excluding China) facing which will attenuate the extent of the be followed by significant debt relief. A
unprecedented economic damage from shock physically, economically and benchmark could be the German debt
the COVID-19 crisis, the UN is calling psychologically. relief administered after World War II,
for a US$2.5 trillion package for these The full details of these stimulus pack- which cancelled half of its outstanding
countries to turn expressions of inter- ages are yet to be unpacked, but an debt. On that measure, around $1
national solidarity into meaningful initial assessment by UNCTAD trillion should be cancelled this year
global action. estimates that they will translate to a $1 overseen by an independently created
The report shows that in the two trillion to $2 trillion injection of body.
months since the virus began spreading demand into the major G20 economies Third, a Marshall Plan for a health
beyond China, developing countries and a two percentage point turnaround recovery funded from some of the miss-
have taken an enormous hit in terms of in global output. ing official development assistance
capital outflows, growing bond spreads, Even so, the world economy will go into (ODA) long promised but not delivered
currency depreciations and lost export recession this year with a predicted loss by development partners. UNCTAD
earnings, including from falling of global income in the trillions of estimates that an additional $500 billion
commodity prices and declining tourist dollars. This will spell serious trouble – a quarter of the last decade’s missing
revenues. for developing countries, with the likely ODA – largely in the form of grants

On most of these measures the impact exception of China and the possible should be earmarked for emergency
health services and related social relief
has cut deeper than in 2008. And with exception of India. programmes.
domestic economic activity now feeling Given deteriorating global conditions,
the effects of the crisis, UNCTAD is not fiscal and foreign exchange constraints Finally, capital controls should be given
optimistic about the kind of rapid are bound to tighten further over the their legitimate place in any policy
rebound witnessed in many developing course of the year. UNCTAD estimates regime to curtail the surge in capital
countries between 2009 and 2010. a $2 trillion to $3 trillion financing gap outflows, to reduce illiquidity driven by

Portfolio outflows from main emerging facing developing countries over the sell-offs in developing country markets
economies surged to $59 billion in a next two years. and to arrest declines in currency and
month between February and March, Lacking the monetary, fiscal and admin- asset prices, say the Secretary General,
calculations show. This is more than istrative capacity to respond to this UNCTAD.
double the outflows experienced by the crisis, the consequences of a combined The proposed package is similar in size
same countries in the immediate after- health pandemic and a global recession to the amount that would have been
math of the global financial crisis ($26.7 will be catastrophic for many develop- delivered to developing countries over
billion). ing countries and halt their progress the last decade if countries in the Devel-

In recent days, advanced economies and towards the Sustainable Development opment Assistance Committee of the
Organization for Economic Co-opera-
China have put together massive Goals. tion and Development had met their
government packages which, according In the face of a looming financial tsuna-
to the Group of 20 leading economies mi this year, UNCTAD proposes a 0.7% ODA target. •
(G20), will extend a $5 trillion lifeline to four-pronged strategy that could begin
their economies.

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