IMF and World Bank prioritize access to vaccines to end pandemic
Washington – After boosting their massive lending powers to help countries hardest hit by COVID-19 last year, the IMF and World Bank are now focusing on providing vaccines to poor countries to prevent the pandemic to derail the global economic recovery.
The Managing Director of the International Monetary Fund, Kristalina Georgieva, is leading a joint $ 50 billion effort with the World Health Organization to expand access to vaccines, especially for impoverished countries that struggle to obtain vaccines crucial.
Georgieva will present the proposal, which was unveiled late last month and backed by the World Bank and the World Trade Organization, to finance ministers from the Group of Seven wealthy nations on Friday at a meeting in London.
At the start of the pandemic, the IMF and the World Bank warned that the pandemic would delay the progress of poor countries, causing increased inequality and a resurgence of poverty.
Now Washington-based lenders are sounding the alarm that unequal access to vaccines will prolong a pandemic that has already killed more than 3.5 million people worldwide.
Low-income countries have received less than 1% of doses administered to date, resulting in a “dangerous divergence” in economic fortunes, Georgieva warned.
As a result, it will take years for some countries to regain their pre-pandemic levels. The economies of Latin America and the Caribbean will not return to their old per capita income until 2024, according to the IMF.
“All the power of fire”
The IMF and the World Bank “understood early on that the economic crisis and recession … would be very broad and very deep,” said Homi Kharas, an economist at the Brookings Institution.
They pushed the Group of Twenty, major rich and developing countries, and private creditors to suspend debt payments from dozens of low-income countries.
“It was the first major step in ensuring that the pandemic does not trigger a debt crisis that could have longer term consequences,” Kharas said in an interview.
The IMF itself has provided direct debt relief to 29 of its “poorest and most vulnerable members”, doubled its emergency funding limits and tripled its concessional resources.
“The IMF has stepped up like never before, lending some $ 110 billion to 84 countries since the start of the pandemic,” said fund spokesperson Gerry Rice.
“Loans to sub-Saharan Africa in the first year of the pandemic were 13 times the annual average. “
Meanwhile, the World Bank has committed more than $ 108 billion during the pandemic in more than 100 countries to respond to “the fastest and biggest crisis” in the institution’s history, the chief said. of bank operations, Axel van Trotsenburg.
“We are using all the firepower we have at our disposal,” he said in an email.
However, critics note that aid to middle-income countries has lagged behind.
“These countries, including many in Latin America, had really been almost left to fend for themselves,” because they are not eligible for the debt service suspension initiative or low cost loans. available for the poorest countries, Kharas said.
On the table
Georgieva herself has recently recognized the need to revisit the lending criteria to achieve these savings, but the priority has now shifted to the effort to immunize at least 40% of the world’s population by the end of the year and at least 60% by the end of 2022..
With the aim of intensifying immunization programs, “the World Bank has released $ 12 billion … and plans to have projects of around $ 4 billion in 50 countries by the middle of the year”, said van Trotsenburg.
But observers urge institutions to do more, faster.
“The problem with the World Bank is their execution rate,” said Adnan Mazarei of the Peterson Institute for International Economic, who added that funding to date is “still a small amount”.
Since the start of the pandemic, the IMF “has done a very, very good job of disbursing money quickly” with few conditions, he said. But now the fund needs “greater strategic clarity” on the immunization goal.
Still, the $ 50 billion plan is a good sign, and the IMF and other organizations should push to “make sure it’s on the table” at the two-day G7 meeting that will take place. will end on Saturday, Mazarei said.
He notes that the administration of US President Joe Biden has already shown more support for multilateral initiatives than his predecessor, including one to increase the IMF’s allocation of its reserve currency – the Special Drawing Rights – by 650 billion euros. dollars.
This proposal is expected to be approved in the coming weeks.
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