Faster progress in ending the COVID-19 crisis could raise global income by $9 trillion – IMF

…Warns against leaving poor countries behind

The International Monetary Fund, IMF has said faster progress in ending the COVID-19 crisis could raise global cumulative income by as much as $9 trillion over the next four years.

This is even as the Fundwarns of the dangers of leaving poor countries behind, advocating for inclusive, mutually beneficial efforts at reviving growth.

The Managing Director of IMF, Kristalina Georgieva stated this in a blog post on Wednesday and obtained by Nigeria Today.

The post titled: “Preventing A Great Divergence: Fork in the Road for the Global Economy”, said the impacts of the pandemic would endure over the next four years and that governments and policymakers across the world have tough choices before them in getting the economy back to pre-pandemic growth territories. 

“We estimate that, by the end of 2022, cumulative per capita income will be 13 percent below pre-crisis projections in advanced economies—compared with 18 percent for low-income countries and 22 percent for emerging and developing countries excluding China. This projected hit to per capita income will increase by millions the number of extremely poor people in the developing world,” she said.

READ ALSO: What Nigeria must do to accelerate economic growth – IMF

She, therefore, advocated a three-pronged approach that will ensure inclusivity and help galvanize the global economy.

The pandemic is not over anywhere until it is over everywhere

The IMF boss said making concerted efforts to end the health crisis across the world was in the best interest of all countries as this “could raise global income cumulatively by $9 trillion over 2020-25. That would benefit all countries, including around $4 trillion for advanced economies—which beats by far any measure of vaccine-related costs”.

She said: “We know that the pandemic is not over anywhere until it is over everywhere. While new infections worldwide have recently declined, we are concerned that multiple rounds of vaccinations may be needed to preserve immunity against new variants.

“That is why we need much stronger international collaboration to accelerate the vaccine rollout in poorer countries. Additional financing to secure doses and pay for logistics is critical. So, too, is the timely reallocation of excess vaccines from surplus to deficit countries, and a significant scaling up of vaccine production capacity for 2022and beyond. Insuring vaccine producers against the downside risks of overproduction may be an option worth considering.

“We also need to ensure greater access to therapies and testing, including virus sequencing, while steering clear of restrictions on exports of medical supplies.”

Viable companies must not be allowed to go under

According to the article, the world, led by G20 countries, has taken unprecedented and synchronized measures, including nearly $14 trillion in fiscal actions, but the “governments need to build on these efforts by continuing to provide fiscal support—appropriately calibrated and targeted to the stage of the pandemic, the state of their economies, and their policy space”.

It noted that “the key is to help maintain livelihoods while seeking to ensure that otherwise, viable companies do not go under. This requires not just fiscal measures, but also maintaining favourable financial conditions through accommodative monetary and financial policies, which support the flow of credit to households and firms”.

Poor countries must not be left behind

“Given their limited resources and policy space, many emerging market and low-income nations could soon be faced with an excruciating choice between maintaining macroeconomic stability, tackling the health crisis, and meeting peoples’ basic needs,” the IMF boss said in the article.

She stated that poor countries’ increased vulnerability not only affects their own prospects for recovery from the crisis but also the speed and scale of the global recovery, and it can be a destabilizing force in a number of already fragile areas.

Part of efforts to support poor countries may include debt service support, and deploying instruments to boost liquidity allocation to countries “without adding to debt burdens”.

“Vulnerable countries will need substantial support as part of a comprehensive effort: The first step begins at home, with governments raising more domestic revenue, making public spending more efficient, and improving the business environment. At the same time, international efforts are critical to further scale up concessional financing and leverage private finance, including through stronger risk-sharing instruments,” she said.

It stated that already, “the IMF has stepped up in an unprecedented manner by providing over $105 billion in new financing to 85 countries and debt service relief for our poorest members. We aim to do even more to support our 190 member countries in 2021 and beyond”.

She, however, emphasized that “it is vital that poorer countries have the support they need to make (needed) investments, especially in the job-rich climate adaptation measures that will be essential as our planet gets warmer”.

She added: “The alternative—to leave poorer countries behind—would only entrench abject inequality. Even worse, it would represent a major threat to global economic and social stability. And it would rank as a historic missed opportunity.”