Cafod

CAFOD disappointed by draft language from G20 communique leaks

Press Release   •   Nov 07, 2011 09:22 GMT

Analysis by CAFOD's Economist Christina Weller:
The development ambitions of the G20 are not evident in this morning's leaked draft of the communique. The hope is that this indicates there is more to come on the G20's development agenda in a separate document.

Actions to help developing countries are reduced to trade reforms and infrastructure investment, both of which have a decidedly mixed record with respect to their impacts on the poorest people.

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The rest of the document - dealing with the G20's core agenda - also holds little promise for those seeking a financial and economic system that supports development.

Reform is critical

President Sarkozy set himself the ambition to reform the international monetary system at the launch of France's G20 lead. Efforts to reform the international monetary system are critical to a fair and stable global economy - something recognised by the Pontifical Counsel earlier last week.

Yet the G20 falls far short of a system that stops volatility, capital flight, and agressive use of exchange rates to boost exports that France sought, and the draft text talks about vague promises to "move more rapidly towards more market-determined exchange rate systems".

Although this seems remote from the interests of developing countries, volatility of exchange rates directly affects the trade prospects of small traders in developing countries.

No evident progress on financial sector reform

There is virtually no language and no progress evident on major agenda items such as financial sector reform - restating commitments made previously or elsewhere.

The only significant new element relates to the "High Level Panel" recommendations on infrastructure in developing countries. Infrastructure is a real barrier to growth in low income countries - when only around a third of Sub-Saharan Africans have access to electricity, it is not surprising that competitiveness is low. Yet here too there is disappointment. Lessons of the need to consult local communities, put in place environmental and social safeguards and carefully manage involvement of the private sector are sidelined in favour of ways to "leverage" private capital to make up for the massive deficits in infrastructure investment in poor countries, have been ignored.

Perhaps there is better to come - the status and source of the draft language is after all unclear. Innovative financing was a big feature of yesterday's discussion, following the release of Bill Gates' report and strong statements in Sarkozy's final press conference. The fact that this topic isn't in the draft language, is perhaps an indication that the best is yet to come.

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