5. Potential solutions

5. POTENTIAL SOLUTIONS Domestic conditions, including political orientation and social pressures, play an important role in determining how governments chose to enact relief and stimulus measures, and whether these measures include support for public transport. The macroeconomic constraints explained on p. 12, however, set the limits of possibility. Until they are addressed, proposals that governments include ambitious investments in LPT in their recovery packages will have much more resonance in the Global North and selected emerging economies than in much of the Global South.

Intergovernmental organisations, trade unions and civil society groups have put forth several proposals for how international solidarity can be strengthened to address the fiscal stimulus gap and support recovery and development in the Global South. The ITUC, ITF and other global unions have called for the expansion of the IMF’s Catastrophe Containment and Relief Trust (CCRT), the creation of a similar mechanism for cancellation of World Bank loan payments and the establishment of a permanent multilateral process for negotiating debt restructuring.37 Other social movement actors have gone further to call for debt cancellation and proposed ways to force private creditors to participate.38

The global unions have also called on IFIs to help finance universal social protection and quality public services, including by supporting domestic revenue mobilisation and international tax reform and creating a Global Fund for Social Protection. More broadly, they have demanded that development finance be reoriented to support public investment in infrastructure and essential public services and jobs, and that loan conditionality and policy advice be reformed to end austerity and promote fair

37 Global Unions, The road to sustainable recovery: IFI policies to create quality jobs, boost public services, and reduce inequality, April 2021. labour practices. They are also pushing the IMF to approve a new issuance of Special Drawing Rights (SRDs) – commensurate with the amount required by developing countries to support their immediate liquidity needs. Countries can swap SRDs for foreign currencies held by another IMF member to help stabilise their own currencies and meet their need for foreign exchange. At its most recent Spring Meeting, the IMF endorsed a new allocation of SRDs worth USD650 billion. However, many experts believe that the allocation must be closer to USD3 trillion if it is to adequately support relief and recovery efforts in the Global South.39

UNCTAD has called for a commitment from official donors to enact a new Marshall Plan that mobilises ODA to fund Covid-19 health expenditures and mitigate rising debt burdens.40 The UN Secretary-General, supported by an independent group of experts, has called on countries in the Global North to meet and go beyond the target set through the 2015 Paris Climate Agreement of providing USD100 billion in climate finance annually to support green recovery in the Global South.41 This goal was not achieved in 2020.

Other proposals for resource mobilisation include: the implementation of global and national wealth taxes, taxes on corporate offshore and super-profits42, the establishment of a financial transaction tax, elimination of public subsidies to the fossil fuel industry, reclaiming 10 percent of global military spending, and democratising and strengthening the role of regional and

39 https://www.eurodad.org/imf_s_new_sdrs_allocation

40 UNCTAD, The Impact of the COVID-19 Pandemic, 66.

41 UN Press Release, Experts support UN Secretary-General’s call for major effort in 2021 to achieve the $100 billion climate finance goal, 11 December 2020.

42 The Biden administration’s proposal for a global corporate tax rate has been praised by many experts as an important step in this direction. https://www.theguardian.com/politics/2021/apr/11/bidens-plans-for-a-global-corporate-tax-rate-could-make-the-world-a-fairer-place