The G-20 (or London Conference) made headlines last week by announcing a global stimulus package of US$1.1 trillion for economies around the world at its meeting on April 2. This must have got those in charge of our struggling economies in the Caribbean to sit up and ask: how can we get a nice piece of that? The answer is really not clear.

In 2007, British Prime Minister Gordon Brown declared that there was a 'development emergency' and there was urgent need for global reforms to fight poverty. The United Nations agreed, but by the end of 2008 began to worry that the world financial crisis was causing rich countries to renege on their pledges to fund the Millennium Development Goals to cut extreme poverty to half by 2015. Now, the G-20 rich countries have come up with this US$1.1 trillion bail-out plan. But will it be to bail out the rich or the poor; and where does it leave middle-income countries like Jamaica and those in the Caribbean?

A watchdog NGO called, The Bretton Woods Project (BWP), has made an analysis of the G-20's plan and gives us grounds for caution. It says the plan provides no vision for transforming world economies and says nothing about reforming the way the International Monetary Fund (IMF) and World Bank do things, as Gordon Brown had said was needed. Yet, the IMF especially, will get so much more to lend and the power that goes with holding the purse strings.

The US$1.1 trillion is mostly a pledge anyway and the BWP says that it is only half of what the world's economies really need. As it is, only US$250 billion was actually money in hand. Of this, US$100 billion had been announced by Japan before. The European Union will provide another US$100 billion and China, US$50 billion. The fact that China is providing so little when it has so much shows that it is not pleased about the G-20's plan because it falls short of reforming the IMF and World Bank and transforming economies.

The G-20 could only promise to find another US$250 billion of real money soon. The IMF will have to rely on printing money to lend members according to their Special Drawing Rights. The majority of this will go to the developed countries since allocation is by voting shares and Caribbean countries, for example, have minuscule voting shares. Although US$100 billion will be available to emerging markets and developing countries, there are many in these categories among which the money will be shared.

The World Bank will be allowed to increase lending as well, but to developed countries. Lending to low-income countries will be based on market rates and on the condition that they have 'sustainable debt positions and sound policies'. Up to this point there is nothing specifically said about middle-income countries like Jamaica.

POOR COUNTRIES

The G-20 did not guarantee any new money to the multilateral development banks. It only supported the idea that they should be allowed to lend more. These banks include the Asian Development Bank, the African Development Bank, and the one most relevant to us, the Inter-American Development Bank (IDB).

Of the US$1.1 trillion, the Bretton Woods Project says that US$50 billion, less than five per cent, will be available to 49 of the poorest countries. Most of those are in Africa. The only Caribbean candidate is Haiti. Most of these funds, and probably virtually all of it, will come from the IMF, which is not a good thing because IMF programmes put the burden on the poor. Countries shun the IMF as much as they can.

Top in the line for help among Caribbean countries should be Haiti. Haiti relies on donor assistance for much of its budget each year. A nice touch by the G20 would have been to cancel Haiti's debt of US$1.5 billion. After all, the US administration is bailing out American International Group (AIG) to the tune of US$180 billion. That's just one company. Haiti is one country of 8 million mostly very poor people. In fact, of that US$180 billion, US$1.2 billion, almost the same as Haiti's debt, will go to pay bonuses to AIG's people.

So, it seems as though the G20's plan is to use the Bretton Woods institutions and the multilateral development banks mostly to bail themselves out. When more details of the US$250 billion for trade financing comes out, we might find that this will serve their trading purpose. In the meantime, the rich countries will either cut back bilateral aid as Italy says it will, or link aid to trade, such as free-trade agreements.

JAMAICA's BUDGET

What kind of help Jamaica gets will be determined by how its situation is perceived and how well it negotiates. With our budget deficits and GDP growth coming out worse than we had projected, lenders might conclude that we lack the seriousness to control our situation. I am not even sure that the minister of finance has acknowledged that we have an economic crisis as yet. The prime minister, though acknowledging the crisis, remains unrealistic believing that we will come out of it by the end of the year. Credit-rating agencies seem to have come to the conclusion that we are not serious about acknowledging our situation and so have downgraded us.

We would seem eligible for IDB funds. However, if our debt is seen as 'unsustainable' and our policies as not 'sound', then we might be shunted off to the IMF, which remains unreformed in a world economy that remains untransformed with major lenders being resistant to both.

It seems that the G-20 meeting actually represented a clash between the old way of the world economy and the new way of transformation that G-20 protesters called for, that being economic justice, transparency and environmental concerns. Will IMF conditionalities include these? If they would that would be good. But they won't 'put people first' as 35,000 G-20 protesters representing millions of people want. They'll put profits first. That is why bonuses for the rich are being paid when debts of poor countries like Haiti are not cancelled. Trade unions, churches, environmental groups, human rights organisations, aid and charity organisations and so on wrote a letter to Gordon Brown before he left for the summit to tell him that this is the kind of world order they want.

What does our budget represent? It means that the Government's economic stimulus package announced in December is the kind that the IMF would approve of. As the research organisation, Caribbean Policy Research Institute implied, a more balanced allocation of the money would have paid for thousands of new police personnel, or trained as many young people at HEART/NTA.

By the same logic, it could have assisted people in new businesses, or those whose wages and salaries cannot keep up. It could have helped our environment or kept poverty rates from falling farther. It seems we are bailing out the old order because we have no vision of the new. That is our development emergency.

Robert Buddan lectures in the Department of Government, UWI, Mona. Email: Robert.Buddan@uwimoan.edu.jm or columns@gleanerjm.com