https://www.oxfam.org/en/press-releases/world-bank-remains-outlier-debt-...
In response to World Bank Group President David Malpass’ remarks today during and after the Bank’s Development Committee Meeting, Nadia Daar, Head of Oxfam International’s Washington DC Office, said
"Despite the clear message President Malpass sends on the critical importance of addressing debt, the Bank is the only one to fail to make any commitment on debt relief. This is a huge shame. Development banks should not hide behind excuses of credit rating drops. They must urgently cancel all developing country debt payments for 2020."
The world's poorest countries owe roughly $12.4 billion in debt payments this year to multilateral institutions —a major portion of it to the World Bank.
Daar added: “To help countries respond to the coronavirus pandemic, we urge the World Bank to prioritize grants that don’t need to be repaid. Even low or interest-free loans will saddle the poorest countries with more unmanageable debts, while middle-income countries desperately need a lifeline of concessional finance to avoid sinking deeper into debt.
“The Bank and its shareholders need to get creative to make this happen. The International Bank for Reconstruction and Development (IBRD), the Bank's fund for middle-income countries, should find a way to offer zero-interest loans with extraordinarily favorable terms and longer grace periods.
“Donors must also play their part —if the Bank’s fast-tracked funding isn’t followed up with new money, it is the equivalent to stealing money from the future and other urgent needs. We can't let women die in childbirth because general health funding has been redirected to the coronavirus response."
More Specifically:
A Response Like No Other: Urgent Action needed by the International Financial Institutions
https://oxfam.app.box.com/s/84ezqxd21jd07m9yce2mgmcha0ry5oto
Scaling up institutional action for debt relief and broadening the call to all creditors.The IMF and WBG must call for all payments on sovereign external debt of developing countries due in 2020 to be cancelled permanently, and not accrue into the future. This should include all creditors: bilateral, multilateral and private.The IMF and WBG should use all available tools to get private creditors on board. IMF and WBG governors should agree this week to cancel the 2020 debt payments owed by developing countries to both institutions.
In many countries debt service payment significantly surpassesspending on public health care and social protection. Cancelling debt payments is the fastest way to keep money in countries and to free up resources to tackle the crisis.750,000 people worldwide have signed petitions calling for debt cancellation, and over 200 organizations have also issued a joint statement.•Securing an SDR allocation proportionate to a once-in-a-century crisis.
The IMF governors should approve an emergency issuance of at least $1 trillion in Special Drawing Rights (SDRs) and ensure that a significant portion of those allocations benefit the IMF’s poorest members. Given the 85% needed votes for such an issuance, the largest members must step up in particular to help make this happen. •Sellinga portionof IMF’sgold holdings.The IMF governorsshould endorse the sale of some of the IMF’s gold holdings. The value of the IMF’s significant gold holdingshasincreased by$19.3bnsince the start of the crisis1. This is more than the total amount of debt payments owed to multilateral creditors ($12.4bn) by the world’s poorest countries this year. The IMF should make use of this dramatic windfall tosupport additional debt relief and concessional financing for low-income countries. Precious aid flows should not be diverted when the IMF has substantial resources to fund its own debt relief.
•Expandingconcessionality.Both the IMF and World Bank should extend concessionality further, being bold enough to change current rules such that the maximum number of facilities and funds can be used to support PRGT/IDA countries with grants to be used to respond to the crisis. To avoid worsening the debt crisis, we propose that all International Development Association (IDA) financing be offered as grants (rather than credits), and all International Bank for Reconstruction and Development (IBRD) loans be offered on concessional terms. To enable these shifts, the World Bank should reopen an emergency window for IDA19 to receive additional aid flows for the COVID-19 response, and explore the need for an agreement and mechanism to facilitate concessional loans from IBRD.
We urge theBank to look to all its arms and resources to see what it can deploy to support the public sector response to this crisis. While we welcome the $160bn under discussion, it is unclear if this would be in the form of new money.Beyond these immediate decisions, the IMF and World Bank must ensure financing is accountable and responding to the needs of the people affected:
•The WBG must continue to prioritize support for public health, and focus this on free, publicly-delivered health services, which are oftenthe only option accessible to those at risk, especially women and those in poverty. In particular, it must rapidly ensure that all WBG health projects are supporting countries to provide healthcare free of charge for all, including coronavirus tests and treatment; to suspend insurance co-payments; and to ensure universal access without discrimination.
IFC should use its current leverage as an investor or shareholder in private hospitals and health facilities to ensure they align their capacity to nationalpublic health efforts for free or at minimal and transparent cost to governments; foregoing profits and shareholder returns and providing free testing, treatment and care without discrimination for those at risk of COVID-19 and others with essential health needs.
TheIFC should focus any new health investments in companies that are developing diagnostics, medical equipment and supplies for equitable and accessible distribution globally.•Resources for COVID-19 response must not be diverted away from existing essential health services or other crucial needs now or in the future.In Sierra Leone during Ebola, there were almost as many additional maternal and neo-natal deaths as deaths from Ebola, due to reductions in life-saving care for pregnant women.3
This situation must not be repeated.Moreover, it is crucial that finance forclimate adaptation and resilience is not diverted, as tropical storm season gears up and climate impacts continue to increase in frequency and severity, which magnifiesCOVID-19vulnerabilities exponentially.
Where funding is frontloaded or repurposed from existing commitments (e.g., from IDA19) for the COVID-19 response, this must be followed up by new funding commitments for the recovery period to ensure adequate resources are available in the aftermath of this crisis.•Scaling up social protection for all.
The World Bank should scale up its support for social protection programs that are universal where adequate programs don’t exist, avoiding divisive poverty targeting, and providing income support by way of new cash transfers, seeking toinclude those not yet covered and expanding such schemes to all residents, including migrants and refugees.
•Eliminate economic conditionality.It is critical that the IMF signals that conditionalities in programs that were approved prior to this crisis will be relaxed to ensure that countries have the flexibility to boost spending to respond to the crisis. Moreover, neither the IMF nor the World Bank should be including any economic conditionalities in financing packages during this crisis regardless of which facility/fund/instrument is used.
The institutions should, however, secure public undertakings from governments that rapidly scaling up investments in public health and social protection of citizens will be their top priority.•Fiscal transparency andaccountability.With bigand rapid transactions, the IMF and WBGmust ensure thatmoney is spent transparently and accountably, and is responding to the needs of the people affected.
At minimum, recipient countries should commit to disclose fiscal, budget, and spending data already being collected.
The two institutions should also do all they can to be as transparent as possible,disclosingall country financinginformation as early as possible.
•Budget supportshould be used wherever robust accountability systems exist to allow maximum flexibility for countries to determine priorities in the response, and as appropriate, the Bank should provide technical assistance in priority sectors.
•Stakeholder engagement and civic space.With financial support moving into countries swiftly, it is crucial to have independent civil society and journalists tracking and monitoring how those funds are spent. Yet in many countries before the crisis we saw crackdowns on civil society. We ask the IMF and World Bank to do all they can to protect and promote a strong role for civil society capable of holding government accountable for using these resources responsibly and transparently.
As recovery efforts begin, we must see the IMF and WBG:
•Fighting economic inequality, through social spending and progressive taxation.This crisis has shown that inequality is the breeding ground of this pandemic and the virus has exposed the frailties of economic policies of austerity, job insecurity and absence of adequate investments in health and universal social protection.The Bank and IMF have contributed to eroding the political and financial support for public services over many decades. The crisis is an opportunity to do things differently. It should be a wake-up call for the IMF and World Bank to rethink their approach to investment in public health and other crucial public services to ensure they are being prioritized in all their policies and programs. In the aftermath of this crisis, there will be no place for austerity and we urgently caution against the IMF imposing fiscal consolidation in a blanket way or too quickly. We do expectsignificant revenue shortfalls across the world, but now is the time for the IMFand World Bank to take bold positions on the revenue potential from corporations and wealthy individuals. We need to see domestic resource mobilization efforts that raise revenues quickly and progressively to tax those who can afford it, and reduce genderand economic inequalities. Bold and inclusive global tax reforms will be needed as well.•Securing a feminist recovery with priority on gender justice and women's rightsat the heart of all programming moving forward. With women disproportionately being impacted by this crisis through the loss of already precarious and low paid jobs, taking on the brunt of unpaid carework with children home from school, and suffering horrendous increased domestic violence, this crisis has shown usthat we must do everything we can to advance gender justice in all its forms and in all programming as a priority.
•Rebuilding a more sustainable and resilient future.As the immediate response to the crisis subsides, there will be a crucial windowofopportunityto rebuild amore inclusive and sustainable economy that is resilient towards future shocks, including that of climate change.
The IMF can provide fiscal solutions on this front and the WBG should increase their support to countries to boost their climate actions and accelerate the transition to 1.5 degree-compatible economies. This will help with operationalization and enhanced implementation of Nationally Determined Contributions (NDCs).
We are at a historic moment where we cannot afford falling back to business as usual where the world's poor will only face increased vulnerability with a warming climate.Oxfam is also doing its part in the response, gearing up our entire humanitarian aid delivery system to help the most marginalized and people living in poverty as they face the rising tide of infections.
We are working with communities, local NGOs, women and refugee-led organizations in more than 50 countries to deliver much needed humanitarian assistance and curb the spread of the virus.
We are also scaling up our cash transfer programming and food assistance in vulnerable communities across the globe —from poor urban settlements in Bangladesh to rural indigenous communities in Guatemala. Alongside this work, we will continue to advocate for the IMF, WBG, governments and other multilateral actors to take urgent and ambitious action proportionate to the scale of this crisis.
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