World Bank Reports a Third of Developing Countries Face Slower Growth than Before Pandemic
G20 presidents and prime ministers gather in India for their annual summit to discuss global economic development. Absent from the meetings this year are Russia's President Vladimir Putin and President Xi Jinping of China.
"G20 leaders are meeting as countries can't get out of debt and face food shortages and rising inflation," stated Eric LeCompte who heads the religious development coalition Jubilee USA Network. "As we face a number of global crises, the war in Ukraine is slowing decisions on global development."
The World Bank reported that one-third of developing countries will grow more slowly next year than in 2019, before the pandemic crisis. Because the Federal Reserve and other major central banks increased interest rates, developing countries are paying more on their debts.
“At least 60 countries cut human services and their climate change efforts in order to pay their rising debts," stated LeCompte. “The G20 has a critical role in moving forward more effective and efficient debt relief processes."
The group will review the debt situation in developing countries. In June, public and government creditors agreed to reduce debt for the second of four countries to apply to the G20's Common Framework, a debt reduction process the group set in 2020. Private creditors have not committed to matching debt reductions.
For the last two years the G20 had a focus on increasing resources for multilateral lenders and development banks. India’s G20 Presidency appointed former Secretary of Treasury Larry Summers and former Chairperson of the Fifteenth Finance Commission of India Nand Kishore Singh to chair a group of experts to examine additional needs to strengthen these multilateral lenders.
“We welcome the international community’s exploration of ways to increase [multilateral development banks’] financing capacity and support combining new ways to use capital and capital increases in order to reach the desired scale,” the Africa religious leaders said in their August statement.
The New Delhi summit also reviews the impact of $650 billion in pandemic relief aid through an IMF 2021 emergency currency creation or Special Drawing Rights.
“The IMF reports that this pandemic relief helped the global economy, lowered borrowing costs and supported critical crisis spending in poor countries,” shared LeCompte. "Given the positive results from the use of Special Drawing Rights, the G20 should use this relief tool more widely."
As advanced economies received more than $400 billion in SDRs, the G20 agreed to transfer $100 billion to countries in need. The IMF reports pledges of more than $24 billion SDRs to its Poverty Reduction and Growth Trust, which lends to the poorest countries at zero-interest rates, and over $45 billion to a recently-created vehicle to provide long-term, low-cost pandemic preparedness and climate interventions loans.
“Special Drawing Rights held by wealthy countries are a cost-effective way they can contribute significantly to boosting development finance through the African Development Bank and other funding vehicles for climate, food, agriculture, infrastructure and other poverty-reducing priorities,” the Africa interfaith religious leaders stated.
Read Jubilee USA's press release on the Africa interfaith religious leaders meeting here.
Find more details on the G20 Summit here.
Find the IMF SDR Assessment Report here.
Read the Report of the G20 Independent Experts Group on Strengthening Multilateral Development Banks here.