In the midst of the annual Spring Meetings of the International Monetary Fund and the World Bank Group, the NY Times published an article on the “systemic risk” debt and climate change pose on the world economy, quoting the DRGR proposal.
After five years, the cumulative increase in real GDP associated with investments in green energy infrastructure is nearly twice as high as that on spending on non-ecofriendly energy. Findings like these highlight the importance of a post-COVID-19 sustainable recovery not only from an environmental but also an economic perspective.
According to a report launched by the Global Recovery Observatory only 18.0% of announced recovery spending can be considered “green” while just 2.5 % of total COVID-induced expenses to date had “positive green characteristics”. These findings once more stress the importance of the DRGR idea.
Statement on Debt Relief for a Green and Inclusive Recovery
The COVID-19 crisis is the biggest threat to human prosperity and a healthy planet in close to a century.
As the world confronts a new wave of the COVID-19 virus, the United Nations reports that many developing countries are forced to deploy 30-70 percent of government revenues to pay off international creditors rather than pursue these broader goals.
The World Bank estimates that upwards of 150 million people could be pushed into extreme poverty by 2021, with 8 out of 10 of these ‘new poor’ in middle income countries.
This is not the time for nation-states to be forced to trade their people and futures for international debt repayments that have ballooned for reasons largely out of their control, putting action on our shared climate change and sustainable development goals on hold.
It is the time to reset and restart our economies in a new direction with inclusivity, climate and development goals at the core of the recovery effort.
To that end, we the undersigned call on the G20 and world leaders to provide debt relief to emerging market and developing countries with unsustainable debt burdens so they can secure fiscal space to combat the virus, protect the vulnerable, and secure a green and inclusive recovery.
We also support a substantial new allocation of the International Monetary Fund’s Special Drawing Rights, accompanied by a significant increase in multilateral and regional development bank financing aided by an increase in those banks’ capital. These measures are necessary to finance health, social protections and climate transitions for emerging market and developing countries in need.
We therefore call on the G20 to enact a Debt Relief for a Green and Inclusive Recovery Initiative that requires bilateral, multilateral, and private sector debt relief on a grand scale analogous to the Highly Indebted Poor Countries Initiative.
A G20 emergency summit on a Green and Inclusive Recovery in response to the debt crisis is overdue. We urge the Italian G20 presidency to initiate such a summit as soon as the Biden administration has come into office.
An unprecedented crisis requires an unprecedented response. It is time for G20 leaders to advance comprehensive debt relief and new financing to secure sustainable development and climate goals.
Marion Williams – former Governor of the Central Bank of Barbados
Atiur Rahman – former Governor of the Bangladesh Bank
Salehuddin Ahmed – former Governor of the Bangladesh Bank
Luiz Carlos Bresser-Pereira – former Finance Minister of Brazil
Nelson Barbosa – former Finance Minister of Brazil
Roberto Zahler – former Governor of the Central Bank of Chile
Jose Antonio Ocampo – former Finance Minister of Colombia
Hans Eichel – former Finance Minister of Germany
Patrick Honohan – former Governor of the Central Bank of Ireland
Y.V. Reddy – former Governor of the Reserve Bank of India
D. Subbarao – former Governor of the Reserve Bank of India
Rakesh Mohan – former Deputy Governor of the Reserve Bank of India
Njuguna Ndung’u– former Governor of the Central Bank of Kenya
Andrew Mullei – former Governor of the Central Bank of Kenya
Fazeel Najeeb – former Governor of the Maldives Monetary Authority
Sanusi Lamido Sanusi – former Governor of the Central Bank of Nigeria
Shamshad Akhtar – former Finance Minister of Pakistan and State Bank of Pakistan Governor
Oscar Dancourt – former Governor of the Central Bank of Peru
Jean-Paul Adam – former Finance Minister of Seychelles
Momodu Kargbo – former Finance Minister and Governor of the Bank of Sierra Leone
Rob Davies – former Minister of Trade and Industry for South Africa
Chalongphob Sussangkarn – Former Finance Minister of Thailand
Louis Kasekende – former Deputy Governor of the Bank of Uganda
Note: The statement was featured in the Financial Times
The COVID-19 crisis has come at the worst possible time for humanity. The poorest countries were already struggling to meet their development goals in the face of cyclones, wildfires, and droughts, and the world now has only a decade left to slow down increases in global temperature and sea levels before they become catastrophic, and invest in climate-resilient development.
The DRGR report calls on the G20 calls on the G20 to move beyond the Common Framework for Debt Treatments and to require public and private creditors to provide a substantial debt cut to a broad set of low- and middle-income countries, in exchange for a commitment to a green and inclusive recovery.
On Monday, 16. November 2020, 2pm UTC, we launch our first report. It puts forth an ambitious proposal for concerted and comprehensive debt relief on a global scale to support sustainable recoveries, economic resilience, and a just transition to a low-carbon economy.