Is there really $1 trillion promised in that G-20 communique?

Indispensible financial blogger Felix Salmon, Liam Halligan for The Telegraph, and the New York Times have been parsing the fine print of the G-20 Communique, which promised $1 trillion in additional funding to help ease the financial crisis and get countries growing again. 

They note that countries, including the United States, are behind on their IMF funding — the crux of the program — and require various sorts of congressional approval; therefore, the funding push may be illusory. The NYT concludes: "Some of the money has yet to be pledged, some is double-counted and some would be counted in a ‘synthetic currency’ that is not actually real money."

In some sense, none of this should come as a surprise; the "$1 trillion" number hardly represented the sum of an ordered and pledged budget. The Communique included massive sums with little fine print. Member-states’ contributions to international organizations always become backed-up. And the ink isn’t dry on the page yet — there’s been little time to sort out which commitments will come to fruition first. 

The New York Times notices a specific potential problem:

In perhaps the most novel move, the Group of 20 authorized the monetary fund to issue $250 billion in Special Drawing Rights, known as S.D.R.’s — a “virtual currency” whose value is set by a basket of real currencies like the dollar, euro and British pound. The I.M.F. will issue the S.D.R.’s to all 185 of its members, and they in turn can lend them out to poor countries.

Special Drawing Rights are not cash but a form of credit, against which a country can borrow. The Obama administration, which conceived the idea and sold it to the Group of 20, figures it would create between $15 billion and $20 billion in additional credit for the poorest countries.

But there is a caveat here as well. For the program’s benefits to be felt globally, the United States and Europe will need to lend out their Special Drawing Rights. In the United States, that will require Congressional approval.

To say that the SDRs aren’t a real currency is both true and false. They are a unit of exchange eventually backed with actual cash; the IMF collects money from the member-states to fund them.

And countries like Russia and China, as well as IMF representatives themselves, have called for massive revisions to the outmoded program, to make it useful for alleviating the recession. How that will work remains to be seen.

Plus, it seems early days to be sounding the death knell for the G-20 spending promises. Will the $1 trillion number prove correct? No. But that isn’t to say the IMF won’t massively expand to aid ailing countries — ultimately the point of the summit.