Reaching the marginalized: EFA global monitoring report, 2010; 2010

EDUCATION AT RISK: THE IMPACT OF THE FINANCIAL CRISISThe international response: missing a human dimensionThe crisis responseThe framework for the international responseto the financial crisis was set at the G20 summitin April 2009, with the ensuing G8 summitsupplementing the agreement. The recoverystrategy gave the IMF wide-ranging responsibilityfor strengthening global liquidity by expandingcurrency reserves to prevent further financialcrises and by providing concessional finance forlow-income countries. The World Bank was givenresponsibility for financing measures aimed atstrengthening social protection and tackling foodsupply problems.The checklist of global financing commitmentsand provisions for the poorest countries isexpansive and superficially impressive. Muchof the new financing has come through the IMF:Boosting global liquidity and strengtheningfinancial stability. Under the G20 plan the IMFhas injected US$283 billion into the globaleconomy in Special Drawing Rights (SDRs),currency reserves that can be exchanged forhard currency. New SDR allocations effectivelysupplement IMF members’ existing currencyreserves, thereby providing liquidity to theinternational economic system. 9 The IMF’scredit lines for emerging markets have alsobeen reinforced through the creation of anew facility and the strengthening of existingfacilities. 10Scaling up concessional financing. Measureshave been introduced to increase the IMFresources available to low-income countriesthrough the fund’s Poverty Reduction andGrowth Facility (PRGF). The measures couldincrease concessional lending by US$17 billionthrough to 2014, with up to US$8 billion by2010. Several new financial instruments havebeen created to provide more concessionalsupport to low-income countries. 11 In addition,the IMF has modified its Exogenous ShocksFacility (ESF), a mechanism aimed at providingsupport to countries facing exceptionalproblems as a result of conflict, natural9. Low-income countries will receive an additional US$17 billionin SDRs (Gottselig, 2009).10. In April 2009, the IMF announced the creation of a new flexiblecredit line and increased flexibility for its standard stand-byarrangements.11. These are the Extended Credit Facility (medium-term support),the Standby Credit Facility (short-term and precautionary support)and the Rapid Credit Facility (emergency support).disaster, falling commodity prices or rising foodprices (Bredenkamp, 2009a, 2009b; IMF, 2009a,2009d; Woods, 2009b). 12The G20 meeting signalled a broad agenda forthe World Bank. It included what was termed‘a substantial increase in lending of US$100 billion’and increased bilateral contributions for a rangeof crisis-response facilities aimed at strengtheningsocial protection and wider poverty interventions(Group of Twenty, 2009). These include the newInfrastructure Crisis Facility, VulnerabilityFramework and Rapid Social Response Fund.The World Bank was also made institutional leadactor in the response to the global food crisis.At the G8 summit, governments pledged toprovide US$20 billion over three years to supportcountries struggling with higher food import bills(Group of Eight, 2009b).The IMF and World Bank facilities have attracteda great deal of media attention. An impressionhas been created that rich countries have movedrapidly to extend to the world’s poorest countriesthe same principles applied in their domesticresponses to the crisis. That impression owesless to real financial transfers than to somequestionable reporting practices.Consider first the IMF component of the globalrecovery package. The initial expansion of postcrisislending bypassed the poorest countries,principally because it was directed towardsfinancial stabilization in Europe and someemerging markets. Of the eighteen new lendingagreements the IMF had approved by late July2009, 82% were directed to Europe and 1.6% toAfrica (Woods, 2009b). While low-income countrieswill have their currency reserves boosted by thenew SDR issue, the allocations are linked to thesize of national economies (the increasedallocation for France exceeds that for all ofsub-Saharan Africa). Moreover, an expansionof the national currency reserve does notautomatically generate additional resourcesfor high-priority budgets.What of the increase in concessional lendingthrough the IMF? As of October 2009, this was theonly source of new and additional financing linkeddirectly to the global financial crisis. The IMFclaims the new arrangements enable it to make up12. Much of the additional IMF support to low-income countries in 2009came through the Exogenous Shocks Facility, whose financing termsare equivalent to those of the PRGF.The initialexpansionof post-crisislending bypassedthe poorestcountries33