The Rich
World’s Pandemic Imperative
While the advanced economies reckon with the
costs of the COVID-19 lockdown phase, developing and emerging economies are
facing an even deeper disaster. Without more coordinated multilateral support
for indebted countries' budgets and health systems, the world will never
overcome the pandemic.
WASHINGTON, DC – COVID-19 has confronted the
world with a horrific crisis. Because developing a vaccine will likely take at
least a year, governments need to buy time to keep health-care facilities from
being overwhelmed and to minimize the number of people who fall ill and die,
not least by reducing the rate of new infections.
In rich countries, the arsenal has included
social distancing, sheltering in place, shuttering nonessential businesses (or
more telecommuting), and recommending or requiring face masks. Though the
economic costs of these first-phase measures have been dreadful, they are
preferable to the human and economic costs that would follow from letting
COVID-19 spread unchecked. The second round of the fight can start when the
numbers of new cases and deaths are flat or falling, and when testing and
contact-tracing capabilities have been deployed widely enough to spot and
contain potential outbreaks.
But the pandemic will never be under control as
long as there are still rising infection rates elsewhere in the world. A viral
contagion is like a wildfire: it takes only a few sparks to trigger a
resurgence. No matter how rigorously rich countries try to prevent the virus
from crossing their borders, there will always be enough leakages to cause a
new outbreak. Thus, to combat the pandemic in the absence of a universally
available vaccine, the virus also must be contained in poorer countries, all of
which are woefully ill-equipped for the task.
After all, social distancing and sheltering in
place are impossible in crowded urban areas with community wells and toilets,
where many families live from hand to mouth on a day laborer’s pay. Even if
they were enforceable, lockdowns in these situations would mean
starvation for
many people.
Moreover, most poor countries have inadequate
health-care infrastructure (too few hospital beds, scarce personal protective
equipment) and underfunded and understaffed public-health systems. They also
lack the domestic resources to finance social programs, as well as the
foreign-exchange reserves to import critically needed supplies and equipment.
Many governments are already in dire fiscal shape, and cannot provide even minimal
support for unemployed workers and their families.
Poorer countries thus have two overarching
needs. First, they require additional support for their health systems, so that
they can provide sufficient medical care to all who become infected. Otherwise,
COVID-19 cases, not to mention the mortality rate, will grow – possibly
exponentially. Second, most poorer countries need financing to avert widespread
starvation and penury. While a few have at least some fiscal space to increase
their expenditures, most do not.
Coordination among rich countries will be
necessary to address both needs. So far, there has been some progress with
respect to finance, but not nearly enough when it comes to addressing the
health crisis.
In terms of finance, many developing and
emerging economies already had stretched budgets and were borrowing to support
economic growth prior to the pandemic. Argentina and Lebanon were experiencing
deepening debt-servicing crises, and many other governments had become too
indebted to be able to risk much more external borrowing.
To address this problem, the G20 has agreed to let 76 countries freeze
repayment of bilateral sovereign debt until the end of this year, and has urged
private creditors to do the same. At the same time, the International Monetary
Fund has canceled six
months of debt
payments due from 25 countries, and made additional funds available for quick
disbursement. And the World Bank and regional development banks have also
committed additional resources to the effort.
The world clearly needs a better mechanism for
addressing unsustainable sovereign debt, but that is a task for the future.
During the ongoing crisis, there are proposals for a debt-servicing
standstill, perhaps through an IMF facility. These measures would certainly
provide more resources with which to limit the spread of the virus and prevent
deeper humanitarian disasters. But closer coordination to support
fragile public-health systems is also urgently needed.
Historically, the United States and the World
Health Organization have taken the lead in fighting epidemics such as the
2014-16 Ebola outbreak in West Africa. But under US President Donald Trump, the
US has abandoned its leadership role and launched a political war against the WHO, even going so
far as to suspend funding for the organization. (In response, China has
announced that it will contribute an additional $2
billion to the
WHO.)
Considering that the current need for resources
far exceeds what can be met, it is crucial that health-care assistance be
allocated as efficiently as possible. That can be done only through careful
coordination. If poorer countries are left reliant wholly on bilateral
assistance, some will end up receiving more support than others, regardless of
their needs.
Assisting poorer countries is not just the
right thing to do; it is also the only way to contain the pandemic. We have
never needed an effective WHO – or US leadership – more than we do now. The
rich world should do itself a favor and permit no further delay in marshaling
resources and assistance for low- and middle-income countries, which should be
allocated through the WHO based on those countries’ health needs.
Anne O. Krueger, a former World Bank chief
economist and former first deputy managing director of the International
Monetary Fund, is Senior Research Professor of International Economics at the
Johns Hopkins University School of Advanced International Studies and Senior
Fellow at the Center for International Development at Stanford University.
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