Faster access to vaccinations for high-risk populations could potentially save more than half a million lives in the next six months alone, according to new analysis in the IMF note to the G20 meeting.
G20 finance ministers and central bank governors will convene in Venice Friday and tomorrow as an uneven recovery from the pandemic grows more pronounced. The world is facing a worsening two-track recovery, driven by dramatic differences in vaccine availability, infection rates, and the ability to provide policy support. It is a critical moment that calls for urgent action by the G20 and policymakers across the globe, IMF Managing Director Kristalina Georgieva writes in a new blog.
So what needs to happen?
Step up international cooperation to end the pandemic: IMF staff recently outlined a US$50 billion plan that could lead to trillions of dollars gained from faster vaccine rollout and accelerated recovery. This would be the best public investment of our lives and a global game-changer.
Step up efforts to secure the recovery: Led by G-20 economies, the world has taken extraordinary and synchronized measures, including about US$16 trillion in fiscal action. Now is the time to build on these efforts with measures that are tailored to countries’ pandemic exposure and policy space.
Step up support to vulnerable economies: We estimate that low-income countries have to deploy some $200 billion over five years just to fight the pandemic. And then another US$250 billion to have the fiscal space for transformative reforms, so they can return to the path of catching up to higher income levels. They can cover only a portion of that on their own. It is therefore vital that wealthier nations redouble their efforts, especially on concessional financing and dealing with debt.
A Shot In The Arm For The World
The IMF Executive Board on Thursday supported a general allocation of Special Drawing Rights (SDR) equivalent to US$650 billion. This largest allocation in the IMF’s history will create new resources for countries in need, boosting the liquidity and reserves of all IMF member countries.
“The SDR allocation will help every IMF member country – particularly vulnerable countries – and strengthen their response to the COVID-19 crisis,” IMF Managing Director Kristalina Georgieva said in a statement.
What happens next?
The Executive Board adopted a decision that concurred with the Managing Director’s proposal for a new general SDR allocation. The proposal will be sent to the Board of Governors for their approval in early August. The allocation would be implemented 21 days after the Board of Governors approval.
How will this help countries in need?
SDR general allocations are distributed across IMF membership as the same percentage of their IMF quota shares. That means large countries like the United States will have access to a larger amount of the new allocation, but IMF staff is exploring a number of proposals for channeling SDRs to the countries that need them.
Countries already have the option to send SDRs to the IMF’s Poverty Reduction and Growth Trust, which provides interest-free financing to low-income countries. A new Resilience and Sustainability Trust is also being considered, depending on the priorities of the membership, to help countries ensure greener recoveries from the crisis.
A Worrying Trend For Africa
The COVID-19 pandemic accelerating in many countries in sub-Saharan Africa as infection rates reach new peaks. IMF African Department Director Abebe Aemro Selassie discussed the need to boost the supply of vaccines to the region.
“Right now what we’re seeing in sub-Saharan Africa is less than 1 per 100 adults is being vaccinated,” he said on CNN this week. “This contrasts with, on average, in advanced countries of about 30 per 100, and in many countries it’s even higher.”
IMF staff has put forward a US$50 billion plan that sets the target of vaccinating at least 40 per cent of the global population by the end of 2021 and at least 60 percent by the first half of 2022. To reach these targets, critical actions would include more dose sharing with the developing world; supporting grant and concessional financing to increase and diversify vaccine production, and bolster in-country delivery, diagnostics, and therapeutics; and removing all barriers to exports of inputs and finished vaccines, and other barriers to supply chain operations.
“Why has the vaccine rollout been so slow in Africa? The primary constraint is the international community has not done enough to boost global supply of vaccine quickly enough,” Selassie said.
Infrastructure And Connectivity
IMF Managing Director Kristalina Georgieva highlighted the benefits of building resilient market economies and strong macroeconomic fundamentals in a speech this week to the Three Seas Summit and Business Forum.
She stressed the importance of infrastructure investments, digital connectivity, and spending on healthcare in her remarks to the Three Seas Initiative that brings together 12 EU member states between the Baltic, Black and Adriatic seas: Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
“infrastructure investments can significantly boost productive capacity and output. We estimate that, for every euro spent, this will increase output by a factor of 1.7‑2.5 over the long term. And it is not just about boosting the economy of today, but building an economy for tomorrow,” she said.
No country has been spared the effects of changing weather patterns but developing countries–and island states, in particular, are facing the brunt of climate change while not having contributed to its root causes.
Prime Minister of Barbados, Mia Mottley, and Madagascar’s Finance Minister, Richard Randriamandranto, joined IMF Managing Director Kristalina Georgieva to discuss the effects of natural disasters on their economies and how policies can be designed to help countries adapt to the new climate reality.
