Debt Relief for a Green and Inclusive Recovery
The Covid-19 crisis is the biggest threat to human prosperity in close to a century. Many emerging markets and developing economies are facing grave difficulties in obtaining the fiscal space to combat the virus, protect the vulnerable, and mount a green and inclusive recovery. Not only has the global economic slowdown hampered the ability of many devel- oping nations to mobilise resources, many are using 30% to 70% of what little government revenue is coming in to service debt payments. This report calls for a global debt relief effort to grant emerging markets and developing countries in need the space necessary to fight the virus and put together a green and inclusive recovery.
Debt relief has to be part of a broader agenda for enabling green and inclusive recoveries in countries around the world. A debt relief effort such as the one we propose should be coupled with a new and ambitious allocation of SDRs and significant new capital mobilised from development finance institutions. This will provide the fiscal space for emerging markets and developing countries to adopt sustained counter-cyclical responses to the crisis.
Countries share common but differentiated responsibilities in combating the climate crisis. Without large-scale debt relief and efforts aimed at facilitating a green and inclusive recovery, the international community can abandon its hopes of achieving the 2030 Agenda for Sustainable Development and the Paris Agreement. The lives and livelihoods of current and future generations hang in the balance.
This report puts forward the proposal for a «Debt Relief for Green and Inclusive Recovery Initiative» as an ambitious, concerted, and comprehensive debt relief initiative – to be adopted on a global scale – that frees up resources to support recoveries in a sustainable way, boosts economies’ resilience, and fosters a just transition to a low-carbon economy.
About the Authors
Financial Markets Program Director
Initiative for Policy Dialogue (IPD)
Stephany Griffith-Jones is an economist specialising in international finance and development, with emphasis on reform of the international and national financial system, especially in relation to financial regulation and global governance. She is Financial Markets Director at the Initiative for Policy Dialogue, Columbia University. Previously she was Professorial Fellow at the Institute of Development Studies at Sussex University. She was Director of International Finance at the Commonwealth Secretariat and worked at UN DESA and ECLAC. She was senior consultant to governments in Eastern Europe, Latin America and Africa and many international agencies, including the World Bank, the IADB, the European Commission, UNDP and UNCTAD. She was a member of the Warwick Commission on financial regulation. She currently is theme leader on finance in the ESRC /DFID growth programme for LICs, especially African ones. She has published over 20 books and many scholarly and journalistic articles. Her books include Time for the Visible Hand, Lessons from the 2008 crisis, edited jointly with José Antonio Ocampo and Joseph Stiglitz.
Kevin P. Gallagher
Professor of Global Development Policy
Global Development Policy Center
Dr. Kevin P. Gallagher is an associate professor of international relations at Boston University, and senior researcher at the Global Development and Environment Institute at Tufts University. He specializes in global economic and development policy, with an emphasis on Latin America.
Professor Gallagher is the author of The Dragon in the Room: China and the Future of Latin American Industrialization (with Roberto Porzecanski), The Enclave Economy: Foreign Investment and Sustainable Development in Mexico's Silicon Valley (with Lyuba Zarsky), and Free Trade and the Environment: Mexico, NAFTA, and Beyond. He writes a monthly column on globalization and development for the The Guardian (UK) newspaper.
Professor Gallagher is also a research fellow at Boston University’s Frederick S. Pardee Center for the Study of the Longer-Range Future where he directs the Global Economic Governance Initiative. In 2010 he served on the US Department of State’s investment subcommittee of the Advisory Committee on International Economic Policy.