G24 ministers and central bank governors meeting
13 October 2020
As the pandemic has spread worldwide, we have watched as advanced countries have been able to mount emergency fiscal packages in the trillions of dollars over the past few months, yet most developing countries continue face suffocating limitations on their ability to bridge huge and rising liquidity shortages on their own.
Faced with the COVID-19 crisis UNCTAD estimates that developing countries face a wall of repayments on their external public and publicly guaranteed debt in the region of $2.7 trillion to $3.4 trillion in 2020 and 2021 only. This not only calls for a dramatic expansion of the debt suspension initiative but also for more concerted dialogue on a better international financing architecture, including for debt restructurings but also for extending greater liquidity to developing countries in the form of SDRs.
At the same time, developing countries continue to be regularly bled of their legitimate sources of revenue: tax revenues are regularly plundered through commodity mispricing, depriving, for example Africa of around $89 billion annually, according to our recently released Economic Development in Africa Report. That’s more than the continent receives in ODA and approximately half of the unmet SDG investment gap on the Continent.
This calls for drastic and coordinated action not only to combat the pandemic in the short term, but to put the global economy on a footing for long-term recovery. This must include a more equal and greener expansion, and support towards a resilient path to structural transformation in developing countries.
This requires, first and foremost, to learn the lessons of the past. If we are to “build forward” (as the IMF MD calls it) to “a better recovery” with truly inclusive prosperity, a quick return to ‘expansionary austerity’ policies adopted in the aftermath of the Global Financial Crisis must be avoided at all costs. Rather, what is needed is a big public investment push with effective international support and coordination, and with recovery and reform, at both the national and international levels, going hand in hand.
UNCTAD stands ready to continue supporting the G24 in its pursuit of these objectives and will continue to support the interest of developing countries in these discussions going forward. Thank you.
