The United Nations is urging 20 of the world's most powerful economies to support a $1 trillion stimulus plan for developing countries when the 20 meet in London next month, U.N. officials said on Wednesday.
U.N. officials familiar with the plan told Reuters it was based on an estimate of the financing developing countries will need in 2009 and 2010 to weather the financial crisis. Secretary-General Ban Ki-moon had made the appeal in a letter to leaders of the so-called Group of 20 nations, they said.
Ban's proposal, first reported by the Financial Times, will be discussed at the G20 summit meeting in London on April 2. He will also discuss it with British Prime Minister Gordon Brown when the two met meet at U.N. headquarters later on Wednesday.
It was not immediately clear whether the G20 leaders would agree to back the plan, which U.N. officials said was intended to provide liquidity and prevent widespread social unrest in developing countries due to a deepening of the credit crisis.
Our worry is that this is fast becoming a political issue, said one U.N. official on condition of anonymity. He said ensuring social protections across the developing world was crucial.
The U.N. officials said a quarter of the funds should go to the poorest countries where the most vulnerable people are living. Another quarter should go to critical investments, such as infrastructure projects, in order to stimulate growth in line with the U.N. fight against poverty already underway.
The other $500 billion should be used to bridge liquidity gaps and keep trade flows active, the officials said.
Much of the financing, they said, could be done through already existing international organizations like the World Bank and International Monetary Fund, as well as through funding of U.N. development projects.
In his letter Ban also warned G20 leaders against what one official described as knee-jerk protectionism. Ban also emphasized the importance of environmentally friendly investments in clean energy and so-called green jobs.
Approval in London is not assured. One worry, U.N. officials said, was a potential split emerging among European Union countries on the wisdom of stimulus packages.
Czech Prime Minister Mirek Topolanek, whose government holds the rotating EU presidency but lost a confidence vote in Parliament on Tuesday, was quoted as saying U.S. President Barack Obama's stimulus policy was the way to hell. His deputy Alexandr Vondra later said he had been misunderstood.