The UK led the way in announcing its commitment to much greener economic development, and pushing other G20 states to ensure their fiscal stimulus packages and support the development of low-carbon economies. All of the G20’s wealthy states must achieve cuts in domestic greenhouse gas emissions by 25-40 per cent compared to 1990 levels by 2020. But the poorest people in the world are already being hit by climate change, so there is no time to waste. In reflection of this, prime minister Brown has pushed G20 leaders to commit to a package of measures that supports poor countries, especially African countries through the current financial crisis and enables them to meet the Millennium Development Goals. Brown has done much to assist developing countries through raising UK aid to close to 0.7% of our national income, cancelling third world debt and recently cancelling Haiti’s debt – and he has worked within the new G20 structure to push this agenda too. Other rich states within the G20 should increase their aid to developing countries, meaning raising aid levels by around $140 billion annually.
The G20 both should fund a fiscal stimulus package for low-income countries and provide trade financing, so poor countries can continue to grow and work their way out of poverty. This is the perfect chance to make the global economy much more transparent, including clamping down on tax havens, which channel huge sums of money transferred illicitly out of developing countries. This crisis not only threatens the poorest of the poor, but also those who have only recently begun to work their way out of poverty. Unfortunately, it has taken the global financial crisis to push world leaders into action. We need to address the structural causes of poverty including the governance of the World Bank and International Monetary Fund; rules that govern tax havens and companies’ behaviour, all of which excludes developing countries and often keeps poor people in poverty.
In my view, the IMF and the World Bank have the necessary skill set and deep knowledge of the world’s countries to provide technical and co-ordinating leadership to both the G20 and UN General Assembly on revamping the global financial system. Based on lessons learned from the current financial crisis, political leaders from rich nations, emerging economies and poor nations have the opportunity to move towards a more transparent and equitable global financial architecture. This effort will rely heavily on shared technical expertise, coordination of activities across national borders and sustained political will across economic ideologies.
I believe that the G20 political leaders, in concert with the United Nations General Assembly, should appoint an International World Bank Reform Panel to make recommendations on the mission, strategies, governance, management and operations of a World Bank better suited to the development needs of the 21st century. The panel should have representatives from all regions of the world, with expertise in development, finance, economics, civil society, the law, operational management, organisational change issues, research and diaspora communities. The panel should work quickly, utilising the work of various independent reports in the last decade and taking into cognisance the massive changes that have occurred worldwide (political, economic and social) since the founding of the World Bank more than 60 years ago.
Calls for comprehensive reforms in the World Bank are now widespread. Rich nations, emerging economies and poor nations are united in the quest for fundamental reforms in the structure and operations of the IMF and the World Bank. For good governance, the UK should support democracy, accountability, transparency, human rights and proportional representation within the IMF and the World Bank and these key issues ought to be included in these two international institutions’ constitutions as a matter of priority. These are fundamental reform efforts in the IMF and the World Bank that the UK government should support: a tight focus on the fight against global poverty; the need to better legitimise IMF and World Bank operations through transparent, equitable and representative governance structures; a simplification of the banks’ operations and an enhancement of technical resilience in responding to short-term global crises; and a more assertive IMF and World Bank leadership in ongoing efforts to reshape the international financial system.