Don’t prop up failed system, ActionAid warns G-20

While the leaders of the world, including Indian prime minister Manmohan Singh, are hailing the G-20 summit in London as a success, the international non-government organisation ActionAid has warned that the $1.1 trillion global recovery package agreed at the meet should not be used as artificial life support for a discredited and 'dying' economic model.

"There is a risk that this expensive breathing space will be used to carry on business as usual," Soren Ambrose, ActionAid's development finance adviser, said in a statement on Friday, a day after the summit closed in London. "Instead, developing countries need to be encouraged to introduce new policies to put markets at the service of people instead of the other way around.''

"We need to invest in the human capital and the productive capacity of women and the poor to bring about land reforms, massive investment in smallholder agriculture, universal and free education and health care," added Anne Jellema, international policy director at ActionAid.

Use of the International Monetary Fund's reserve assets is an innovative step, but it needs to be repeated every year until the recession ends, rather than used on an ad hoc basis, she said.

"This will enable poor countries to access much needed liquidity at very low rates of interest without incurring the complex and often punitive conditions attached to normal IMF loans," he added. "The Group of 20 must ensure that at least half of IMF's Special Drawing Rights go to developing countries."
 
Currently, SDR allocations are related to a country's economic and political clout rather than its actual needs, and the IMF is largely controlled by the US along with a few other wealthy economies.