The accelerating downward spiral in the global economy has made me increasingly convinced that the G20 leaders gathering at the London Summit in early April should announce that they stand ready to provide up to $1 trillion to help developing countries to cope with the crisis over the next two years. This wouldn't be a handout, but an important part of a global stimulus package. It's in the rich world's own self-interest to anticipate the developing world's financing needs and to put in place the necessary resources. To do so is both a moral and a security imperative.
Since I released my CGD Note How to Unlock the $1 Trillion that Developing Countries Urgently Need to Cope with the Crisis, in mid-February, interest in the idea in official circles and feedback from colleagues has led me to review the numbers and make several corrections, which I have incorporated in the posted version.
An SDR issuance by the IMF would yield not $250 billion for developing countries, but rather 32 percent of that amount, or $80 billion, because developing countries hold 32 percent of IMF quotas ("shares," "votes," "access," "subscriptions" -- all of these apply in some sense in the IMF context). I have nonetheless kept the total at $1 trillion hoping, as I explain in the revised note, for full funding of bilateral (ODA) commitments from the traditional donors to low-income countries, plus new Chinese support for the IMF, Asian Development Bank, or other MDB lending.
I hope to clarify in a future blog post exactly how much of the $1 trillion would be available to low-income countries (using World Bank definitions) and how much would go to middle-income developing countries. Both types of countries will need help to cope with the oncoming economic and jobs crisis. And helping them cope is vital to us all.