In the run-up to the G-20 summit this fall, development groups from across the world rallied behind a currency transaction levy, an innovative new funding mechanism for addressing global poverty.
A tax of just 0.005 percent on currency exchanges between the U.S. dollar, the yen, the euro and the British pound, a CTL could generate up to $33 billion in additional funds each year to help the world’s poorest. Yet the Group of 20 hardly even discussed it.
Considering this levy could help wealthy nations dramatically step up their development aid without hampering the still-fragile global economy, this was quite regrettable.
In 2001, the United Nations member states agreed on a set of eight goals for conquering the most serious problems facing the developing world. Known as the Millennium Development Goals, they focused on significantly reducing hunger, poverty, illiteracy and disease by 2015.
While steady progress has been made on these fronts, leading nations aren’t on pace to meet their professed commitments.
This has allowed grave threats to global health and well-being, like tuberculosis, to persist. Currently, over 2 billion people are infected with the disease. Tuberculosis is the leading killer of people with HIV/AIDS.
And, perhaps most frightening, many of the new strains of the disease are proving resistant to pharmaceutical treatment.
According to the World Health Organization, it would cost roughly $6.7 billion a year to reverse this epidemic. If current funding levels persist, though, only about half that amount will be available.
The plight of the developing world has been made worse by the global financial crisis. The U.N. estimates that, in 2009, somewhere between 55 million and 90 million more people will be living in extreme poverty than originally had been estimated.
A CTL could help meet these challenges and guarantee greater progress toward the U.N.’s Millennium Development Goals.
Every year, the foreign currency market handles almost $800 trillion in trades. Taxing those transactions at 0.005 percent — just five-thousandths of one percent — is small enough that it would have practically no negative effect on global economic growth. And since the currency exchange market is already completely computerized, the levy could be collected electronically, making implementation logistically painless.
The levy could also help address the funding shortfall faced by the Global Fund to Fight AIDS, Tuberculosis and Malaria. The group, which funds countless initiatives aimed at stomping out these destructive diseases, will need to raise $30 billion in the next year to keep up with the demand for aid. The CTL could play a part in filling that funding gap.
It’s important to note that the CTL wouldn’t be an alternative to state-sponsored aid, but rather a healthy supplement. Indeed, traditional aid is still sorely needed — especially when it comes to improving the health of children and mothers.
The mortality rate for children under five in sub-Saharan Africa and Southern Asia in particular has shown nearly no progress. In fact, between 1990 and 2007, the number of under-5 deaths rose from 4.2 million to 4.6 million.
And over half a million women die as a result of childbirth each year — nearly all of them in the developing world.
The problems afflicting the developing world are as severe as they are numerous. If G-20 leaders are going to meet their moral obligation to these countries, they will need to start deploying bold new strategies. By failing to even consider the CTL in September, they missed one of their greatest opportunities to do so.
Joanne Carter is the executive director of RESULTS Educational Fund. She also sits on the board of the Global Fund to Fight AIDS, Tuberculosis and Malaria.
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