Surprising Success at the G20

Cross-posted from here

The conclusion of the G20 seems, at first blush, to provide a great deal of positive news for developing countries. The official Communique begins with the recognition that

prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today’s population, but of future generations too.

To achieve financial stability and promote a return to trade and economic growth, G20 leaders had to act boldly, and it appears they have.

Leaders at the London summit agreed to provide the resources needed to increase IMF lending by up to $750 billion and the lending capacity of other multilateral development banks by $100 billion. In the run up to the meetings, World Bank President Robert Zoellick called for the creation of a Vulnerability Fund to provide resources to support infrastructure and social safety net investments in developing countries. The Communique does not mention this mechanism explicitly, but does talk about enabling International Financial Institutions (IFIs) to finance “counter-cyclical spending, bank recapitalisation, infrastructure, trade finance, balance of payments support, debt rollover, and social support” in developing countries.

The Communique also includes commitments to avoid trade protectionism, a welcome sign given the havoc restrictive trade policies caused in grain markets last year.

In addition to increased resources, leaders also agreed to aggresively pursue changes in the governance structure of the IFIs, especially efforts to make these institutions more inclusive and more representative of developing countries. As Uri Dadush at the Carnegie Endowment for International Peace explains:

…the communiqué is striking in the degree to which it accommodates the interests of developing countries in various ways: they are the greatest likely beneficiaries of the increase in IMF and Multilateral Development Bank resources; dates are set for reviewing governance of the International Financial Institutions (IFIs) to be rebalanced in their favor; leaders of the IFIs will henceforth be selected on merit…”

Not to be overlooked in the outcomes from the G20 Summit, President Obama used the occasion to pledge to provide $448 million in immediate assistance to countries suffering increased hunger and poverty as a result of the food and financial crisis. He is also proposing to increase assistance for agriculture and food security to $1 billion.

Altogether not a bad day for the world’s hungry and poor people.

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