- $500bn for the IMF to lend to struggling economies
- $250bn to boost world trade
- $250bn for a new IMF "overdraft facility" countries can draw on
- $100bn that international development banks can lend to poorest countries
But no agreement on fiscal stimuli.
But read carefully. It is an "additional package", but not necessarily additional funding. Let us start with the "$250 billion to boost world trade over two years". This is nothing more than the existing export credit guarantee facilities that have been in place for years (ECGD, Coface, Hermes, EXIM, JEXIM) that finance almost every exported Airbus and Boeing airplane, German power station and major export project. At $125 billion a year that is no more than is already on offer. The catch with this finance is that to get it, an importer has to buy export capital goods and fund the balance (usually 15%-25%) of the cost, so most of the available finance doesn't get used.
So how is this different from what was available in 2008, 2007, 2006? It isn't.
Moving on to the extra $100 billion of investment by the multilateral development banks. They don't borrow from governments, they borrow from the wholesale markets, so the additional $100 billion is coming from the markets, not governments, but only if the markets want to lend. All that has happened is that their mandate to borrow and lend has been increased, but this will only happen if they are presented with suitable projects and the wholesale markets provide them with the funds.
And the IMF money is $250 billion more than the IMF asked for, so why are they getting $250 billion more? The answer is that they are not getting any extra money, but simply being permitted to print extra SDR's (Special Drawing Rights), which the IMF may sell to member countries for real money if they want to. But of course there is no obligation on any IMF members to buy the SDR's, so it is a bit like a bank with lots of unsold travellers cheques sitting in the till.
And what of the other $500 billion of IMF funding? Well that is just an increase of an aspiration for amounts that G20 countries will subscribe to the current round of funding, a bit like when the vicar doubles the target of village church roof repair fund. Sadly, nobody has reached for their cheque book this time except for the man from the Chinese takeaway who has been trying exert some influence in the parish. The Japanese manufacturer on the edge of town chipped in $100 billion last November and there is a promise from Brussels for €75 billion ($101 billion or £69 billion), but that is all history and nothing new.
Mr Wong's $40 billion (which incidentally he has not confirmed) is a lot less than his Braziliam neighbour says he should be paying if he wants a seat on the parish council, but it is the only new real money in the entire $1.1 trillion programme. The rich Americans and the Saudi have promised nothing but have noted the higher target. The rest of the $500 billion is smoke and mirrors. Still, no tax payers were hurt in the preparation of this communique.
Meanwhile, the deluded Gordon Brown has a notion that there will be £5 trillion of fiscal stimulus coming out of this, not that anyone has agreed any such thing, it's just a number he has picked out of the air. No doubt we will hear this number repeated ad nauseam in the next few weeks. "It must be true. It's in the G20 communique".
We have only just got used to the word trillion in financial terms, but already Labours spin and deceit has reached trillion dollar size proportions.