A British civil society campaign recently launched a first-of-its-kind coalition called Crack the Crises, representing over 10 million people across the United Kingdom. Before U.K. Chancellor Rishi Sunak convenes Janet Yellen and other finance ministers from the G-7 group of leading industrial nations Friday, he would do well to look at what this campaign is requesting.
This diverse coalition is asking countries to “crack” each individual crisis of COVID-19, injustice, and climate change on its own terms — as well as spotting the synergies underlying all of them. This isn’t your grandfather's Millennium Development Goals-era effort. The coalition fully embraces the universality of the Sustainable Development Goals, underpinned by a so-called localization revolution that prioritizes investing in marginalized communities in the global north and south.
Chancellor Sunak … must now look up and recognize that this is a historic year for him personally to stand up and lead on the global stage.—
But it all starts with a cleareyed, shared strategy to increase quality funding for the economic recovery after the coronavirus pandemic. Finance diplomacy ultimately trumps climate or vaccine diplomacy. So, here are five strategic steps the U.K. must ensure finance ministers take at upcoming key moments for the G-7, United Nations Climate Change Conference, and G-20 group of leading nations in 2021:
Direct the IMF and World Bank to go big or go home
The U.K. must partner with other shareholders to direct the International Monetary Fund to oversee a major new issue reallocation of Special Drawing Rights and to direct World Bank President David Malpass to present a plan that delivers significant net flows to Africa to counter these crises. If Malpass fails to present that plan by the time of the World Bank and IMF Spring Meetings in April, the U.K. should work with the United States to replace him with someone who can — there are many great candidates.
The international finance institutions together can and should offer most of the $100 billion that the U.N. Economic Commission for Africa has estimated Africa needs in 2021. Otherwise, what are the IFIs good for?
Boost aid quality and front-load quantity
Right in the middle of a health, climate, and poverty crisis, the United Kingdom’s proposed cuts to aid would kill at least 100,000 children — and probably millions more over time. The cuts will also break multiple multilateral promises, damaging the country’s moral leadership reputation. That’s why principled Conservative Party leaders will kill this proposed deal if it ever goes before them.
If and when restored, aid funding need not return to business as before. A change in course could electrify the United Kingdom’s G-7 and Conference of the Parties leadership priorities, such as tackling COVID-19, girl’s education, and promoting climate action.
Indeed, the COVID-19 crisis is the clearest case conceivable for front-loading and borrowing against aid funds at very low rates. The ACT-Accelerator’s financing gap — currently almost $28 billion — for example, requires such front-loading. The returns on this investment are so huge that it’s bizarre there isn’t already a pandemic bond agreement in place.
‘The Great SDG Debt Reset’
COVID-19 economic aftershocks threaten a cascade of debt crises. Building on the G-20’s “common framework,” the G-7 needs to accept that a new debt architecture is necessary, with an innovative process that better balances the interests of creditors and debtors. This should be coupled with further debt service suspension and result in restructuring and cancellation as required.
Devex speaks to the executive secretary at the United Nations Economic Commission for Africa about COVID-19's impact on Africa's economies.
There is one existential imperative: to redirect markets so they adequately finance the SDGs by 2030. A Liquidity and Sustainability Facility and SDG-linked bonds are additional innovative measures that would accelerate SDG financing.
Pro-SDG fiscal reform
These measures all have bigger implications for G-7 and Organisation for Economic Co-operation and Development economies but also come with deep implications for low- to middle-income country financing. U.K. support for a grown-up, global digital economy tax system would raise at least $100 billion a year for investment into a green jobs boom, according to OECD. This would result in probably more financing, as this system will help expose illicit financial flows worth hundreds of billions a year.
SDG financial and economic system reset
The U.K. can play a unique role in ensuring that the International Financial Reporting Standards fully integrate sustainability disclosures into mainstream financial reporting — i.e., impact accounting and management.
These may seem like tedious technocratic details. But if investors can better track their pensions and 401(K)s, and consumers can better track their daily purchases to know how they are helping advance the SDGs, then we can connect the power of money with mass consumer behavioral change. As the birthplace of fossil fuel industrialization, the U.K. has a historic responsibility to reset this system.
All of 2021’s key summits on health, gender, climate, and more can add up to more than the sum of their parts by supporting country SDG strategies that integrate COVID-19, equality, and climate and ecological imperatives.
These steps start with the agenda that Chancellor Sunak must lay out with other finance ministers and then work to drive through the G-20, IFI, and COP summits. Sunak has so far been fully domestically focused. He must now look up and recognize that this is a historic year for him personally to stand up and lead on the global stage.