As world leaders and finance ministers meet this weekend to discuss funding for poorer countries, two leading development agencies are calling for major reforms of the global financial system to give the war on poverty new momentum.
Christian Aid and ActionAid are concerned that the present financial crisis will be used by rich countries as an excuse to renege on aid commitments to the developing world.
The crisis, they say, should instead be seen as a rare opportunity for root and branch reform of the financial system that would benefit both rich countries and poor countries alike.
In particular, they want the Doha Financing for Development conference, which opens in Qatar on Saturday, to agree the need for new banking and accounting regulations to stop tax dodging by transnational corporations and other businesses. The agencies warn that such activities "deprive the developing world of billions of dollars of badly needed revenue each year".
They also want to see countries take steps towards ending the banking secrecy offered by tax havens and the upgrading of the UN Committee of Experts on International Co-Operation in Tax Matters into an intergovernmental body to implement the other regulations.
The demands are contained in two reports launched by the organisations on Thursday, 'The Morning After the Night Before:The Impact of the Financial Crisis on the Developing World', from Christian Aid, and ActionAid’s 'Hole in the Pocket: Why Unpaid Taxes are the Missing Link in Development Finance'.
Christian Aid has calculated that tax revenue lost to poorer countries annually through evasion amounts to US$160bn. If used according to current spending patterns, the money could save the lives of 350,000 children under the age of five each year.
ActionAid says the situation for developing countries is likely to deteriorate rapidly as the financial crisis bites ever deeper. It estimates that more than US$400 billion worth of growth could disappear by 2010.
"The turmoil now engulfing the world’s wealthier economies can be traced directly back to the same factors that have undermined the developing world for years, condemning poor countries to a cycle of poverty," said Christian Aid’s policy manager Alex Cobham.
"In rich countries, lax banking and accounting regulations, and tax havens offering banking secrecy, led to a massive credit boom which has now ended in disaster. In poor countries, the same factors have for years enabled many transnational corporations and other businesses to minimise, avoid or even illegally evade altogether paying the tax revenues that the developing world so badly needs."
