Fortune News | Dec 11,2021
Apr 10 , 2021
By Jeffrey D. Sachs
This week’s spring meetings of the International Monetary Fund (IMF) and the World Bank offer a historic chance for financial cooperation. The major economies, including the United States, the European Union, China, and other G20 countries, have already signaled their support for a new allocation of 650 billion dollars worth of the IMF’s reserve asset, special drawing rights (SDRs), to ensure that governments in low-income and middle-income countries have the means to combat the COVID-19 pandemic and start on the path of investment-led recovery. With leadership, boldness, and creativity, this global financial cooperation can help to end the pandemic.
Mass immunisation is key. Less than a year after SARS-CoV-2, the virus that causes COVID-19, was first identified and sequenced, financial backing by governments – including the US, United Kingdom, Germany, Russia, China, and India – enabled several companies to roll out safe and effective vaccines. Rich countries that quickly negotiated favorable deals with vaccine makers have received most of the doses thus far. But ending the pandemic requires that all countries achieve comprehensive vaccine coverage as soon as possible. In practical terms, the target should be no later than the end of 2022.
Such an unprecedented global undertaking requires strong cooperation, including financial support. Yet the urgency should be clear to all. As long as COVID-19 persists at high rates of transmission anywhere in the world, the pandemic will continue to disrupt global production, trade, and travel, and will also give rise to viral mutations that threaten to undermine previously acquired immunity from past infections and vaccinations. Still worse, on the current trajectory, COVID-19 could well become endemic in many regions of the world, imposing high health and economic costs for years to come. As US Treasury Secretary Janet Yellen emphasised this week, all countries, therefore, share a strong interest in ending the pandemic everywhere.
The world’s governments established the Access to COVID-19 Tools Accelerator (ACT-A), which includes the COVID-19 Vaccine Global Access (COVAX) facility, the vaccine pillar of ACT-A, to ensure universal control of SARS-CoV-2. But while ACT-A and COVAX have established global plans for vaccines, tests, and treatments, the plans need urgently to be strengthened for two closely related reasons.
First, the operational target currently used by COVAX – a minimum of 27pc of all eligible countries’ population immunized by the end of this year – must be raised to vaccination of all adults by the end of 2022. This is necessary to end the pandemic and to reduce the chances of new mutations.
Second, planning until the end of 2022 is urgently needed, given the lead times for scaling up the production and supply chains of vaccines and other crucial commodities. Yet ACT-A and COVAX remain underfunded even for 2021: the 11 billion dollars governments have allocated to date leaves a financing gap of 22 billion dollars for this year – a shortfall that has thus far delayed necessary planning through the end of 2022. In the meantime, the current vaccine shortfall is leading countries to scramble to jump the queue, including by paying premium prices. This underscores the urgent need to ensure that all countries, including the poorest, can achieve comprehensive vaccine coverage in a fair and timely manner.
The additional sums needed to ensure universal vaccine coverage by the end of 2022, and other COVID-19 supplies, are modest – perhaps 50 billion dollars for ACT-A. That is a negligible amount relative to the enormous global benefits of ending the pandemic and the massive pandemic-related spending by governments of high-income countries around the world. The US government alone has spent roughly five trillion dollars in emergency outlays between March 2020 and March 2021.
To do its job, ACT-A (including COVAX) needs front-loaded funding to cover vaccine needs through 2022. Given that scaling up the production of vaccines (and some other commodities) requires a lead time of 6-12 months, the 50 billion dollars should be guaranteed within the coming weeks, so that ACT-A and COVAX can work with manufacturers to ensure the necessary supplies. The IMF’s allocation of new SDRs offers a unique – and perhaps the only – opportunity to get this funding in hand.
When the new SDRs are issued, around 20 billion dollars of new reserves will go directly to the poorest countries. In addition, around 100 billion dollars or more that is allocated to rich countries will be recycled to the IMF to be used for long-term, low-interest loans. IMF Managing Director Kristalina Georgieva has been working closely and creatively with G20 governments to design this novel, promising approach. One excellent idea is to use the SDRs to bolster the IMF’s Poverty Reduction and Growth Trust (PRGT), the Fund’s financing window for poor countries.
There is an important precedent here. In 2015, the IMF created a Catastrophe and Containment Relief Fund to help provide emergency Ebola-control financing to Guinea, Liberia, and Sierra Leone. This time, the PRGT financing could be made conditional on its use for ACT-A and COVAX-related procurements and for other COVID-19 control measures that the borrowing government documents to the IMF (such as reimbursements for COVID-19 vaccines that have been contracted by the member state outside COVAX).
ACT-A is now preparing estimates of the financing that the world’s 92 low- and middle-income countries eligible for COVAX support will need for vaccines, testing, therapeutics, and other supplies until the end of 2022. Based on the estimated financing needs, an ACT-A financial plan can be established for each country, to be supported by the SDRs and the expanded PRGT funds.
In the next few weeks, a rational plan to finance all countries’ COVID-19 balance-of-payments needs until the end of 2022 should emerge. The IMF was created to handle such a balance-of-payments emergency. Access to IMF financing will protect the well-being and macroeconomic stability of individual countries and the world as a whole. We must seize this critical opportunity for the United Nations, the IMF, and key governments – including the US, China, Russia, the EU, Japan, the UK, and others – to cooperate effectively for the sake of humanity.
PUBLISHED ON
Apr 10,2021 [ VOL
22 , NO
1093]
Fortune News | Dec 11,2021
Viewpoints | Oct 28,2023
Fortune News | Jan 25,2020
My Opinion | Jul 15,2023
Commentaries | Apr 25,2020
Commentaries | Feb 01,2019
Radar | Aug 26,2023
My Opinion | Oct 16,2021
Agenda | Jul 25,2020
Radar | Apr 10,2021
Photo Gallery | 96172 Views | May 06,2019
Photo Gallery | 88434 Views | Apr 26,2019
My Opinion | 67005 Views | Aug 14,2021
Commentaries | 65717 Views | Oct 02,2021
My Opinion | Apr 13,2024
Feb 24 , 2024 . By MUNIR SHEMSU
Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slash...
Feb 10 , 2024 . By MUNIR SHEMSU
In his last week's address to Parliament, Prime Minister Abiy Ahmed (PhD) painted a picture of an economy...
Jan 7 , 2024
In the realm of international finance and diplomacy, few cities hold the distinction that Addis Abeba doe...
Sep 30 , 2023 . By AKSAH ITALO
On a chilly morning outside Ke'Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng...
Apr 13 , 2024
In the hushed corridors of the legislative house on Lorenzo Te'azaz Road (Arat Kilo)...
Apr 6 , 2024
In a rather unsettling turn of events, the state-owned Commercial Bank of Ethiopia (C...
Mar 30 , 2024
Ethiopian authorities find themselves at a crossroads in the shadow of a global econo...
Mar 23 , 2024
Addis Abeba has been experiencing rapid expansion over the past two decades. While se...
Apr 13 , 2024
A severe financial stranglehold has been imposed on the banking industry, underminin...
Apr 13 , 2024 . By MUNIR SHEMSU
In an unprecedented move, the central bank has published its inaugural stress test report, uncovering potential fault lines within the finan...
Apr 13 , 2024 . By MUNIR SHEMSU
In a bold departure from its historical position on foreign investment, the federal government has opened...
Apr 13 , 2024 . By AKSAH ITALO
A proposed excise tax stamp system draws controversy amongst industry leaders in the alcohol, tobacco, be...