The United Nations Conference on the World Financial Crisis opens Wednesday in New York. The three-day meeting will focus on the effects of the economic downturn on development.
A UN Secretary General's report says, "Though the crisis did not originate there, developing countries are being severely hit through…weaker trade, tighter global financing conditions and lower remittances. Poverty and hunger are increasing."
The report further says, "The global economic crisis presents an opportunity for strengthened multilateralism.A global crisis requires concerted, global solutions."
A number of aid agencies are calling on rich nations to do more to ensure developing nations can weather the downturn without falling deeply in debt.
Soren Ambrose, development finance coordinator for ActionAid International, spoke to VOA from New York about the UN meeting.
"This conference…is really quite an impressive idea. They have empanelled…experts from all…around the world – former government officials, academics and so on," he says.
The panel is chaired by Nobel prizing winning economist Joseph Stiglitz.
"They have come up with a series of recommendations for restructuring the global economy, in response to the crisis that we're in the middle of, which are really quite innovative," he says.
Rich vs. poor?
"The rich countries like the United states, the European Union, Japan and so on are really taking a stance that the global economy is pretty much ok…. We just need to tweak it a little bit and have some mild reforms," he says.
Ambrose says it's the wrong policy.
"Unless they bring the developing world along, there's always going to be a drag on the global economy. And there's going to be a fundamental instability. This is one of the problems in having a single currency as the global reserve currency…with having poor coordination of regulations,' he says.
He says unless there are major economic reforms, developing countries will remain vulnerable.
"If they take care of the problem now, we could go forward with a more balanced economic system that would work for everyone…. If enough money is devoted to trying to create a stimulus package for the southern (developing) countries…it would benefit both north and south," he says.
G20 promises to help
In April, G20 countries pledged over $1 trillion in financing at their London summit. Much of the money is going to the International Monetary Fund (IMF) for loans to poor countries to help them deal with the crisis.
"It was a start. The G20 did do one thing that we were very pleased with, which was they talked about a new allocation of what's called Special Drawing Rights through the IMF. This is the cheapest and the least cumbersome way for countries to get money that they can use for whatever purpose they want. We think that there should be more Special Drawing Rights," he says. SDR's is basically a currency issued by the IMF with few conditions and low interest rates.
However, Ambrose says, "Most of that money is going to middle income countries. Five percent of it is going to the most vulnerable, poorest economies."
ActionAid and other groups have been critical of the IMF in the past, saying it has mismanaged financial crises in the past.