When Greta Thunberg took to the stage with these now-famous words at a Youth4Climate event in Milan in 2021, she was making an important point about the way that most gatherings of heads of states are viewed as essentially vacuous “all talk, no action” schmooze fests where nothing really gets done.

It’s easy to see why there might be some skepticism around high-level summits and conferences. The 2022 UN Climate Change Conference, COP27, was largely deemed a failure. Davos, the four-day annual meet of the World Economic Forum (WEF), is routinely criticized for being elitist, and the G7 Summit underdelivers every year.

So you’d be forgiven for thinking that the Summit for a New Global Financial Pact, chaired by French Emmanuel President Macron in Paris on June 22-23, isn’t even worth getting out of bed for. But you’d be wrong. 

This gathering of the world’s leaders isn’t just a back-patting exercise. It was convened because the world is facing a time of unprecedented challenges (no really, it’s absolutely pouring) and our global financial system is stopping us from responding at the urgency and scale needed. 

Perhaps you’re thinking that overhauling a global financial system that dates back some 80 years is quite radical. Well, yes, it is actually. That is why this summit is something special. 

Here’s the lowdown on the New Global Financial Pact Summit.

Over 300 states, international organizations, and civil society representatives including over 100 heads of state and 40 international organizations such as the World Bank and the International Monetary Fund (IMF). 

There are, however, some current notable absences such as UK Prime Minister Rishi Sunak, Brazilian President Lula da Silva, and Australian Prime Minister Anthony Albanese. You can help us put pressure on them to attend by taking action now to email and tweet them.

It might not surprise you to hear that the world is in trouble. 

For the first time in a generation, the number of people living in extreme poverty is rising. Climate change is ravaging the world’s most vulnerable countries and is hitting hardest the people who have done the least to cause it. Drought-induced famine is starving parts of Africa. Small island nations are at risk of devastation as ocean levels rise; and those living in the poorest countries are disproportionately affected by health crises and unequal access to education.

There is money (a whopping $1 trillion to be precise) that *could* be used to help. But it’s not. 

Meanwhile, low-income countries are being forced to borrow the money needed to recover from climate-related disasters (which are also growing in frequency and intensity every year) and are being pushed further and further into debt. In what’s been highlighted as a legacy of colonialism, poor countries also actually borrow at a much higher interest rate (about 14%) compared to wealthy countries (around 1-4%). 

They can barely cover their debt repayments before the next natural disaster hits them again, which robs them of any chance of building up resilience to future disasters, or for spending on other critical public services like education and health care. 

Unsurprisingly, finance, and lots of it. 

Climate finance, bank reform, green infrastructure, and solutions to debt. Find out more about what we’re hoping to see at the summit.

It was called for by French President Emmanuel Macron to take stock “on all the means and ways of increasing financial solidarity with the [Global] South.” 

Prime Minister of Barbados Mia Mottley is spearheading a groundbreaking solution called the Bridgetown Initiative which informs a lot of the issues at the heart of the Summit.

The idea is to shake up the status quo and completely reform much of how development finance has worked in the past. This reimagined and reformed global financial system would support developing countries as they face escalating climate disasters, and increase the financing available to fight climate change. Win-win. 

Let's not get too ahead of ourselves. Rome wasn't built in a day, and the global financial system won't be fixed overnight. 

However, this summit represents a pivotal moment — a chance for world leaders to acknowledge the flaws in the financial system and commit to real change. It's a step in the right direction, and that's something to be cautiously optimistic about.

The Global Financial System Is Broken But This Summit Could Change That. Here's What to Know.

For climate change vulnerable nations such as Pakistan, Fiji, Sri Lanka, and Barbados, the threat of natural disaster is a constant reality that requires swift action, forward thinking, and practical solutions.

Not only have these countries contributed almost nothing to the climate crisis, a crisis created by the Global North, but it also so happens that these countries aren’t exactly swimming in spare cash. 

So when disasters do happen — from pandemics to climate change induced food shortages — there’s very little wiggle room to find cash to respond to them, let alone put money aside “just in case.”

A big reason for this is debt. Instead of spending money on public services, low-income countries are having to cough up steep debt repayments. In fact, those repayments are currently at their highest level in 25 years. 

“Debt payments are reaching crisis levels in many countries,” said Heidi Chow, Executive Director of Debt Justice, “hindering the ability of governments to provide public services, fight the climate crisis, and respond to economic turmoil.”

As climate change intensifies and brings with it more ferocious and more frequent extreme weather events, countries need more money to respond and recover from these disasters — which means more borrowing, and more debt. 

Prime Minister Mia Mottley of Barbados — champion of the Bridgetown Initiative — is a leader in highlighting how natural disasters are pushing certain Caribbean countries further and further into debt distress. 

So what can be done about it? Enter: debt pause clauses. Not the sexiest name, we know, but they’re a powerful tool. Here’s what you need to know. 

When disaster strikes, countries at the moment have to keep repaying their existing debt while also accumulating even more debt by borrowing the money they need to respond to the disaster — which prevents them from bouncing back. 

Debt pause clauses (or debt suspension clauses) offer a way to temporarily halt debt repayments, enabling the borrower to stop repaying debt temporarily for a pre-agreed period when a predefined event hits, such as a violent storm, severe flooding, or even a pandemic. 

Debt pauses clauses would thereby free up money to help countries respond to and withstand these events.

A debt crisis, according to Debt Justice, is any situation where debt is leading to human rights being denied, or even being put ahead of life itself.

Debt Justice estimates that people in 54 countries — including Haiti, Mozambique, and Pakistan — are currently living in debt crisis.

Many countries in the Global South were already in or near debt crisis before the COVID-19 pandemic began, but the economic impacts of the crisis have made the situation far worse.

Sri Lanka, for example, has the highest external debt payments of any country this year, amounting to an astonishing 75% of all government revenue. 

The bulk of payments go to domestic lenders like local banks but about a sixth goes to international lenders, institutions like the World Bank or creditors like Japan and France. 

Why can’t they just default on the debt?

Defaulting on debt would free up money but it isn’t a free lunch. Negotiation with creditors is messy, expensive, and drawn out. What’s more, defaulters are frozen out of international markets and pay more to borrow when they are let back in. 

Why are these countries in debt in the first place?

From fighting wars to coping with food shortages, countries get into debt for a multitude of reasons — and the thing about debt is that it’s hard to get out of once you’re in it. 

In 1804, the Haitian Revolution gained Haitians independence from France. The French government demanded compensation for the loss of their property and slaves and forced Haiti to pay millions of gold francs over the following decades.

The debt was so large, and so lasting, that it would help cement Haiti’s path to poverty and underdevelopment. If that money had remained in Haiti, rather than being shipped off to France, it would have added $21 billion to Haiti’s economy over the last two centuries.

By 1911, $2.53 out of every $3 that Haiti earned from coffee taxes, its most important source of revenue, went to paying debts held by French investors.

In January 2010, a devastating earthquake struck Haiti killing up to 300,000 people. In the aftermath, it seemed that the state might collapse. Survivors were left vulnerable to disease and without homes or livelihoods. Haiti’s debt rose to $1.3 billion as new loans were given in an attempt to cope with the disaster.

Not long after, a group of Haitian NGOs called for debt cancellation. This message was taken up around the globe with hundreds of thousands of people signing petitions. The public outcry led governments and the international financial institutions to drop Haiti’s outstanding debt.

It's important to note that debt pause clauses wouldn't apply to existing debt so they won't solve existing debt crises and they're not a silver bullet solution — but what they would importantly do is ensure the existing problem doesn't get worse when countries face a new disaster. 

They would give low-income nations more flexibility in coping with disasters — enabling nations to pause their debt payments in favor of using that money to instead respond to the disaster.

Pause clauses aren't, however, a solution for countries already in debt distress today as they can't apply to existing loan agreements. That's why they're just one important part of a bigger puzzle to solve the global debt crisis, which requires a wider package of financial reforms. Pause clauses are, however, a great place to start in reforming an 80-year-old global financial system. 

Calls have been ramping up in the past year for the world's financial institutions — including the World Bank — to adopt debt pause clauses. The World Bank is one of the world’s largest lenders and is currently owed $230 billion in loans. It also has the power to push through reform on debt.

Campaigners and advocates are hopeful that the adoption of debt pause clauses will be a significant outcome of the upcoming Summit for a New Global Financial Pact, hosted in June by Emmanuel Macron, President of the French Republic, in Paris. 

You can help make that happen. Join us in calling on the new World Bank President Ajay Banga, along with world leaders, to drop disaster debt and act today to save tomorrow.

Countries Can’t Tackle Climate Change as They’re Drowning in Debt. This ‘Pause Clause’ Could Change That.

Dear G20 Finance Ministers and Central Bank Governors,

We are writing ahead of the G20 Finance Ministers and Central Bank Governors Meeting on Feb. 22-23 to share our key recommendations to end extreme poverty now, fight climate change, and set the path for a fair and sustainable future for all.

The world is facing multiple converging crises — growing food insecurity, rising fuel prices, economic instability, and the climate crisis — and they are all hitting poor countries the hardest. 

Representing the biggest economies, the most important donors, as well as the most important shareholders to international financial institutions, the G20 collectively has the power to solve some of the most pressing global challenges. We are urging you to support the following critical measures in the lead up to this year’s G20 summit:

Unlock Public Financing to End Extreme Poverty NOW

Deliver on the promise of Special Drawing Rights

The G20 should make good on their promise and achieve the 100 billion reallocation target this year, including through multilateral development banks (MDBs) to maximise the development impact of Special Drawing Rights (SDRs). These commitments should be additional to existing Official Development Assistance (ODA) promises, in particular the 0.7% ODA/GNI target. 

Accelerate an ambitious Multilateral Development Bank Reform

The G20 should call on all MDBs to fully implement the CAF review recommendations. 

The G20 should require the World Bank, and other development banks, to include at least a third of shareholders' callable capital in the capital adequacy framework. If all shareholders did so, this could leverage upwards of half a trillion in additional lending room at the International Bank for Reconstruction and Development alone.

The G20 should also maintain pressure on the World Bank to move quickly in implementing the Evolution Roadmap and increase access to financing for countries particularly vulnerable to climate change and external shocks, while maintaining the focus on ending extreme poverty, duly incorporating low-income countries’ (LICs) views, and ensuring that there should not be a tradeoff between support for middle-income countries (MICs) and low-income countries (LICs). Support for the country engagement model should continue alongside enhanced regional operations that boost regional integration.

The G20 should convene credit rating agencies to push their participation in the process and understand the threshold for AAA ratings. This should enable shareholders to define a reasonable level of portfolio risk (i.e. moving IBRD’s target threshold for equity to loans ratio to a maximum of 18%).

Provide a political impetus to solve the debt crisis 

The G20 should commission a review of the Common Framework through an independent expert group (similar to the CAF review process).

Support and develop alternative and immediate relief measures like a debt swap mechanism (with bond issuing countries, tied to climate change objectives) or Brady Bond type model (to sell expensive debt, underwritten by creditor countries or institutions, and swapping it out for cheaper debt).

All G20 creditor countries should introduce pandemic and natural disaster clauses and ensure the MDBs do so as well.

G20 governments must immediately close the $16.7 billion gap to meet the $100 billion per year promise on climate finance through 2025to help developing countries reduce their emissions, and cope with the effects of climate change. This funding must be delivered prioritising grants and adaptation, with a view towards achieving a balance between mitigation and adaptation finance. These resources must be new and additional to ODA. 

Collective action is needed to put an end to fossil fuels. Fossil fuel subsidies must be reinvested in clean, just, and sustainable energy systems, and green recoveries. The G20 must commit to concrete plans and set an ambitious timeline to phase out fossil fuel subsidies by 2025 or sooner, while providing targeted support to the poorest and most vulnerable.

Building on the COP27 outcomes, the G20 need to show leadership by making the political commitment to mobilise financing, including grants, by COP28 and explore introducing specific levies to meet the needs, such as a Financial Transaction Tax, a tax on maritime transport and a fossil fuel levy on sales.

With 349 million people across 79 countries facing acute food insecurity, this is the worst food crisis in decades. While COVID-19, climate change, and conflict have been major drivers, political action has also fallen short. The G20 needs to act and save lives now by meeting the urgent humanitarian financing gaps at the same time as investing in long term solutions to prevent future food crises, improve livelihoods, and nutrition and build resilience. That means investing in smallholder farmers and traders, and transforming the food system through investments to institutions such as the International Fund for Agricultural Development (IFAD).

We would welcome the opportunity to meet with your team to discuss the above opportunities.

Friederike Roder, Vice President, Global Advocacy — Global Citizen

Ronan Palmer, Director, Clean Economy — E3G

Prof. Rym Ayadi, President — Euro-Mediterranean Economics Association

Paul Newnham, Executive Director — SDG2 Advocacy Hub Secretariat

What We Want to See G20 Finance Ministers Doing NOW to End Extreme Poverty

The war in Ukraine grows worse by the day, with an estimated 1,500 civilians killed and more than 3 million forced to seek refuge in other countries, according to the Council on Foreign Relations.

Stopping the war as soon as possible is essential for saving lives, protecting Ukraine’s sovereignty, and curbing global repercussions.

In particular, the war has had a devastating impact on local food production. Since the global food system is a fragile web of interconnections, many countries dependent on Russia and Ukraine for food and agricultural supplies now face immediate and looming food shortages that will inevitably worsen the global hunger crisis.  

“I am deeply concerned that the violent conflict in Ukraine, already a catastrophe for those directly involved, will also be a tragedy for the world’s poorest people living in rural areas who cannot absorb the price hikes of staple foods and farming inputs that will result from disruptions to global trade,” said Gilbert F. Houngbo, president of the International Fund for Agricultural Development (IFAD), in a statement. 

“We are already seeing price hikes and this could cause an escalation of hunger and poverty with dire implications for global stability.”

IFAD, a Global Citizen partner, has teams worldwide working to support small-scale producers and improve food security in rural areas of developing countries that have documented the ways in which the war in Ukraine has worsened existing food crises.

The impact has been particularly devastating in agricultural contexts, where the ability to acquire and distribute food is always a vexed ordeal due to chronic underfunding. But new crises are emerging as a result of the disruptions caused by the war. 

Many farmers and food producers are still struggling to recover from the ongoing effects of the COVID-19 pandemic. Now the war is making it harder. 

“IFAD is committed to increasing the resilience of the world’s poorest rural producers who are critical for producing a third of the world’s food. We must do all we can to ensure they have the resources to keep producing food and be protected from additional shocks,” said Houngbo. 

“In the short-term, however, it will be difficult to mitigate the global impacts of this crisis. I join the UN Secretary-General’s call to end the conflict now and restore peace. It is the only solution to avert global catastrophe.”

According to analysis by IFAD and other organizations, here are five ways the war has already worsened global hunger.

Already, millions of smallholder farmers that provide food to their communities operate on tight margins that have been strained even further by the climate crisis. Now, rising fuel prices caused in part by the war have made it difficult for many farmers to carry out basic tasks. 

In Somalia, where an estimated 3.8 million people face severe food insecurity, electricity and transportation prices are climbing, and diesel-powered irrigation methods have become prohibitively expensive, IFAD reports. 

Russia and Ukraine account for approximately 25% of global wheat exports, with around 40% of wheat and corn exports from both countries going to the Middle East and Africa, according to IFAD. Egypt, for example, gets 85% of its wheat and 73% of its sunflower oil from these two countries. 

As a result of the war, prices on imported food have been surging, making it harder for families to afford. 

Fertilizer helps farmers improve their crop yields to meet global food demand. Russia is the leading exporter of fertilize and, as a result of the war, many smallholder farmers have been unable to buy the fertilizer they need. Even before the conflict, spikes in fertilizer prices last year contributed to a rise in food prices by about 30 percent.”

In some countries like Rwanda, a lack of fertilizer could halve harvests, leading to local and regional food shortages.  

Remittances — when migrant workers send money back home — keep the global economy churning, helping many communities worldwide afford the basic necessities of life. The COVID-19 pandemic already significantly reduced the ability of workers to earn and send money home. Now, for families relying on their relatives earning income in Russia and Ukraine, remittances have nearly ceased. 

IFAD reports that more than 31% of Kyrgyzstan’s GDP comes from remittances from Russia alone. Now that the war has disrupted this flow of money, migrants’ families in rural areas may battle to access food, education and other necessities. 

The war has caused urgent food crises in many countries including Iraq, Yemen, and Lebanon, a country that gets 80% of its wheat from Russia and Ukraine. The 2020 Beirut explosion destroyed major grain silos, limiting the country’s ability to store food, according to IFAD. Now that their regular supply of wheat has been cut off, local prices are surging and shortages are occurring.

In Iraq, riots have emerged as a result of growing food shortages.

Prior to the Russian invasion of Ukraine, Yemen was already facing looming famine. Now the country’s food security is rapidly deteriorating, with the World Food Programme calling for immediate global assistance, especially as humanitarian funds get diverted. 

“We are looking at a seismic hunger crisis if we do not step up now. Unless we receive immediate funds, hungry people will lose assistance right at the time they need it most,” said David Beasley, the executive director of the WFP, during a pledging event for Yemen. 

“Funding for Yemen has never reached this point. We have no choice but to take food from the hungry to feed the starving.”

5 Ways the War in Ukraine Has Worsened Global Hunger

During periods of global instability, the International Monetary Fund (IMF) dusts off one of its dormant bailout levers known as Special Drawing Rights (SDRs) to ease the fallout. 

SDRs are basically coupons that countries can exchange with other countries for cash when they need immediate financial assistance to buy essential supplies, like vaccines, and support their economies.

During the financial crisis of 2008-2009, the IMF injected $283 billion into the global economy this way. Last August, the IMF released another $650 billion to support the global economic recovery from the COVID-19 pandemic. 

But a strange thing happens when SDRs are allocated — the wealthiest countries get the most, while the poorest countries get the least. 

In other words, the countries that most need assistance get the least support from the IMF. 

So when the $650 billion was disbursed last year, G20 countries received a whopping $442.8 billion (68% of the total), while the poorest 44 countries received $45.5 billion (7%) of the total. That’s on top of the absurdly disproportionate recovery effort to date, in which wealthy countries have spent 212 times more per capita to bounce back than poor countries. 

But in the meantime, wealthy countries can take matters into their own hands by simply channelling their SDRs to countries that need them more. This would be a form of aid that would cost donating countries only asmall annual interest ratethat could, theoretically, be suspended by the IMF.

G20 and G7 countries have pledged to channel $100 billion in this way, but have only committed $56 billion so far. When countries meet for the IMF’s annual spring meetings in April, countries have the opportunity to commit the remaining amount and go even further to address global inequality. 

Many European countries — including The Netherlands, Ireland, Belgium, Sweden, Austria, Portugal, and Denmark — have yet to commit any SDRs. In the case of Germany, one of the EU’s major economies, legal boundaries might prevent a direct reallocation of SDRs, which should not hold the country back from committing its fair share through budgetary means.

The European Union-African Union (EU-AU) Summit, which kicks off Feb.17, is an ideal moment for progress on SDRs. The push to reach $100 billion in reallocation measures should understandably start here.

This target was inspired by the colossal impact of the COVID-19 pandemic on economies worldwide. But there are other pressing arguments for reallocating SDRs, such as the escalating climate crisis and the need to pandemic-proof health systems in low-income countries. 

But those larger ambitions could benefit from proof of concept. What better place to start than facilitating the global recovery from a pandemic?

You can support the call to ensure lower-income have the support they need to recover by urging key European governments to step up and commit at least 25% of their SDRs to the countries most in need. 

SDRs: The Money Hack That Could Pump $100 Billion Into Weak Economies

The Group of 20 (G20) Summit in Rome wrapped up its final discussions on Sunday, with the world’s largest economies acknowledging the need for accelerated actions toward global COVID-19 recovery and tackling the climate crisis. 

With high-stakes domestic agendas in the background, international calls for vaccine equity, and the United Nations Conference on Climate Change (COP26) kicking off immediately following the G20, this year’s summit posed a big question as world leaders gathered: What does true global leadership look like? 

Ultimately, the G20 didn't live up to its expectations, and no concrete steps were taken to start the healing at a time when we need less talk and more action.

The annual forum took place at an intersection of global dilemmas, with countries around the world still reeling from the devastating effects of the COVID-19 pandemic and an increasingly urgent climate crisis. But impact and recovery have been uneven across the world. The poorest countries have taken on the worst health and economic tolls during the pandemic, and the World Bank estimates a 2.7% increase in poverty rates in low-income nations, where only 3.1% of people have received at least one COVID-19 vaccine dose. 

On top of that, lower-income countries are already suffering the worst consequences of climate change, from droughts that disrupt food systems to severe weather disasters that destroy homes and livelihoods.

This year's G20 Summit was one of the last chances for leaders to step up and share COVID-19 vaccine doses to end the pandemic for all, save 41 million people from starvation, reallocate global funds to help end extreme poverty, and defend the planet by committing to emissions reductions and climate adaptation. 

"This was a moment for the G20 to act with the responsibility they carry as the wealthiest economies on the planet — both to end the pandemic and to curb climate change," Global Citizen said in a statement. "Yet all we saw were more platitudes. This was an opportunity for concrete actions to show how multilateralism is the best answer to tackling the converging crises we face today, but the G20 let the world down."

With everything on the line, what did world leaders fail to deliver? Here’s a recap from this year’s G20 summit.

Last year’s G20 summit ended in commitments toward vaccine equity and loose promises of investments toward the Access to COVID-19 Tools (ACT) Accelerator and vaccine-sharing initiative the COVID-19 Vaccine Global Access (COVAX) Facility. Since then, little progress has been made to protect the world’s vulnerable and vaccine donations have continued to fall short of their goals. 

This year, we called on G20 leaders to finally make vaccine equity a reality and share 1 billion doses to lower- and middle-income countries through COVAX by the end of 2021 and meet the World Health Organization’s (WHO) goal of vaccinating at least 70% of people in every country against COVID-19 by June 2022. In light of the delays of the past year’s vaccine rollout, we also called for greater transparency on the COVAX delivery process. And to reach full vaccine equity, we highlighted the necessity for a temporary waiver of COVID-19 vaccine intellectual property rights from the World Trade Organization (WTO) and pharmaceutical companies so countries with low vaccination rates can start producing their own vaccines.

While the G20 set themselves the goal to vaccinate at least 40% of the population of each country by the end of the year, and 70% by June, there is no plan to get there. This is after 18 months into the pandemic and while poor countries have a vaccination rate of less than 5%. Even basic data is still missing on vaccine production and distribution. Where are the doses?

The COVID-19 pandemic and climate-driven disasters have wreaked havoc on our global food systems and pushed 41 million people to the edge of famine. By funding the World Food Programme’s (WFP) Immediate Response Fund, G20 countries could save millions from starvation with a $300 million pledge.

Global Citizen called on G20 leaders to fund short-term relief and invest in long-term solutions such as increasing investments in climate resilient agriculture research and helping smallholder farmers build better local food structures. By upping their investments to $350 million, G20 leaders could ensure a better future for vulnerable people facing food insecurity. 

The G20 also failed to take action on hunger. While Madagascar is on the verge of declaring the first climate change famine and more than 40 million people suffer from hunger worldwide, leaders didn’t commit any urgent aid to help those people despite record levels of private wealth during the pandemic.

The latest Intergovernmental Panel on Climate Change (IPCC) “Code Red” report showed the devastating effects of global temperature increases beyond 1.5 degrees Celsius — the international limit set by the Paris agreement, which would prevent the worst case scenario of our climate crisis. 

G20 countries were asked to recommit to the 1.5 degrees Celsius goal by taking immediate action to cut greenhouse gas emissions in half by 2030, reach net zero emissions by 2050, protect 30% of land and 30% of seas by 2030, and make clear plans for transitions to clean energy. In order to fully address the climate crisis that wealthy countries have contributed the most to, G20 countries were asked to deliver on their $100 billion a year pledge for climate funding in developing nations by mobilizing funds and filling the $15 billion gap.

On climate change, the G20 seems to miss the emergency we are in by not setting a timeline for the end of coal power or subsidies for fossil fuels. They are still not delivering on the US$100 billion annual commitment. More than words, every country now needs to show they are serious by taking accelerated actions, and COP26 in Glasgow is their chance to make good on what will go down in history as a missed opportunity. “By or around mid century” is not good enough. We need to halve emissions by 2030 and achieve net zero emissions by 2050. We cannot hesitate if we are to avoid catastrophic climate change. That the G20 didn’t align on this basic fact is close to negligence for both people and the planet.

Even at our present standing of 1.1 degrees Celsius warming, island nations are disappearing, widespread wildfires consume the land at an unprecedented rate, and deadly heat waves are becoming increasingly frequent and severe. With our current emissions and plans for mitigation, we are on track to reach 2.7 degrees Celsius above pre-industrial levels by the end of the century. But it’s not too late. At COP26 in Glasgow, world leaders have the chance to take bold climate action, reduce emissions, and save the planet from disaster. Make your voice heard and demand more from our decision-makers here. 

While wealthier nations' economies steadily recover from the COVID-19 pandemic, low-income countries most in need of financial assistance have received disproportionately low amounts of international aid. Special Drawing Rights (SDRs) distributed by the International Monetary Fund (IMF) have been a lifeline to global recovery efforts but have mainly benefited larger economies. We urged G20 leaders to redistribute $100 billion of their SDRs to lower-income countries pushed into poverty by the COVID-19 pandemic. 

The silver lining of the G20 Summit comes in the form of financial support for poorer countries, with the collective commitment by the G20 to reallocate the IMF financial assets, the Special Drawing Rights, with commitments of $45 billion and the aim to achieve US$100 billion. We call on all of the G20 to step up and go beyond the $100 billion. As a reminder, while the G20 receives two-thirds of the SDRs, they don’t need them to finance their economies and recover from the pandemic. 

G20 Summit in Rome Recap: Here's What You Need to Know

Without assistance, an estimated 49 million Africans could be pushed into extreme poverty.

Following an annual meeting of the Economic Commission for Africa that took place in Ethiopia earlier this month, African finance ministers have strengthened the call for the issuing of Special Drawing Rights (SDR) to aid with responding to the pandemic.

In a communique released after their two-day meeting, the ministers called for a new allocation of the SDRs and reallocation of unused SDRs, as well as support for developing countries from international financial institutions in the form of additional resources. 

Over the last year, there has been a strong global call for a new SDR allocation to be issued as a means to help the most vulnerable countries with their response to the COVID-19 pandemic. SDRs are essentially a reserve asset that can be traded between countries in exchange for liquidity, or cash — and you can read a lot more about them here.

The last time SDRs were issued was during the financial crisis that occurred between 2008 and 2009, where the International Monetary Fund (IMF) issued $283 billion in SDRs to help boost the global economy. 

“We are conscious of the fact that new issuances of SDRs are infrequent and often contested events,” the ministers said in their communique. “To this end, we believe that it is imperative that we seize the moment by leveraging these resources to power catalytic investments in Africa’s recovery.”

“The SDRs must be transformative for Africa and help the continent to access the trillions of dollars needed for a green recovery. This is within reach,” they said.

In a paper by the Rockefeller Foundation, it is said that Africa would need an estimated $12 billion for COVID-19 vaccines in order to reach herd immunity. 

Another paper by the IMF has indicated that low-income countries will need an estimated $200 billion to respond to COVID-19 between 2021 and 2025, and an additional $250 billion to accelerate convergence. The paper, published on March 30, also pointed out that achieving this needs more than one response, and that a multi-faceted approach is necessary. 

Africa’s countries are some of the hardest hit by the impacts of the COVID-19 pandemic, and it is predicted that 49 million people on the continent will be pushed into extreme poverty as a result. Innovative solutions are needed in order to alleviate the economic strain that Africa’s poorer countries are experiencing, and this is where the issuing of SDRs could be incredibly beneficial. 

When issued, the IMF distributes SDRs to all its member countries. Each country’s allocation of SDR is in proportion to their IMF share and their relative economic standing in the world economy. This means that richer countries receive more SDRs than poorer countries. 

While the allocation of SDRs will be beneficial for all countries, poorer countries need them most to recover from the pandemic. As it stands, the way the reserve assets are designed to be allocated means that they will not be enough for the recovery of poor countries. Therefore there is not only a need for SDRs to be allocated, but also for wealthier countries to lend theirs to more vulnerable countries who will struggle to recover from the impacts of the pandemic. 

Not only will the assets be used to alleviate the financial burden on developing countries, they could also be used to purchase vaccines for countries that cannot afford them — as the ministers pointed out, financing for vaccines on the continent has been disappointingly slow. 

“Without rapid access to vaccines, the tidal wave of new coronavirus infections will overwhelm our fragile health systems, decimate limited human resources, and set back our recovery,” they said.

African finance ministers also shared their proposal for using SDRs at an April 7 event, hosted by the Center for Global Development, entitled 'How Africa is Tackling the Pandemic and Preparing for a Post-COVID World.' 

Vera Songwe, Under-Secretary General and Executive Secretary of the United Nations Economic Commission for Africa (ECA), said it's asking for $30 billion in SDRs be put in a facility that would allow African governments to borrow at more affordable rates, thereby saving countries billions of dollars.

The call from Africa’s ministers comes as managing director of the IMF, Kristalina Georgieva, announced the potential allocation of $650 billion in SDRs to help fight the pandemic and its impacts in poorer countries. The IMF is set to present a formal plan to this effect in June this year. 

In direct response to this, the African Union’s ambassador to the United States, Hilda Suka-Mafudze, said at a virtual event discussing the continent's pandemic recovery that the SDRs are needed specifically to purchase and manufacture vaccines, and also to boost the continent’s economies. 

“Our call for SDRs also includes the call to allow Africa to locally produce vaccines so we can meet our 60% vaccination coverage goal,” she said. “Producing vaccines locally would make it possible and equitable for Africa to vaccinate sufficient people on the continent.”

She went on to thank Georgieva for the potential allocation of the SDRs and added: “I want to congratulate her for moving the conversation forward and we look forward to the June proposal.”

Rwanda’s President Paul Kagame also weighed in on the issuing of new SDRs at a United Nations’ virtual event on debt architecture, saying that they would “enhance liquidity” on the continent. He also highlighted a need for “an accountability system for which SDRs are used and how they are allocated.”

At the same event, Prime Minister of Namibia Saara Kuugongelwa-Amadhila also called for unused SDRs to be reallocated to those countries who need them most.

Informal discussions on the potential allocation of SDRs are ongoing and can be expected to result in a formal plan from the IMF by June. 

Photo: "Vera Songwe, Under-Secretary-General of the United Nations and Executive Secretary of the Economic Commission for Africa" by IMF Photo/Joshua Roberts is licensed under CC BY-NC-ND 4.0

SDRs: Why African Officials Are Backing This Innovative Way of Funding COVID-19 Response

US Policy and Government Affairs Director

Global Citizen is a movement of engaged citizens who are using their collective voice to end extreme poverty by 2030. On our platform, Global Citizens learn about the systemic causes of extreme poverty, take action on those issues, and earn rewards for their actions — as part of a global community committed to lasting change.

In this article, Global Citizen breaks down what SDRs are, how they can boost the global economy, and whose support is needed to tap into this crucial funding, which could be used for medical supplies, vaccines, food, and further debt relief to prevent low-income countries from sliding deeper into poverty.    

This financing source can help countries recover from the impacts of the COVID-19 pandemic.

Special Drawing Rights: What Are SDRs and How Can They Boost the Global COVID-19 Recovery?

Special drawing rights are reserves, spendable money at essentially zero interest rates, available to countries basically by a decision of the Board of the IMF. 

Economist Jeff Sachs Explains IMF Special Drawing Rights

Global Citizen

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Filmona Hailemichael