Unless countries across the world act together now, the COVID-19 pandemic will cause “unimaginable devastation and suffering around the world”, UN Secretary-General António Guterres said on Thursday at a virtual high-level meeting on financing for development.
Painting a picture of 60 million pushed into extreme poverty; famine of “historic proportions”; some 1.6 billion people left without livelihoods; and a loss of $8.5 trillion in global output – the sharpest contraction since the Great Depression of the 1930s – he called for a response with “unity and solidarity”.
“We are asking for immediate, collective action in six critically important areas”, Mr. Guterres said at the online event to leverage more funds for sustainable development.
Beginning with the global liquidity crisis, he said that this was where the health and economic crises meet; “a dangerous nexus that could prolong and deepen both”, calling for extending Special Drawing Rights to supplement public spending reserves.
Noting that the economic fallout from the pandemic threatens a wave of defaults in developing countries, stymieing the effort to reach the 2030 SDGs, the UN chief’s second call was for “durable solutions on debt, to create space for investments in recovery and the Sustainable Development Goals”.
Next, he urged private creditors holding a growing share of developing countries’ sovereign debt to find incentives to encourage more creditors to provide debt relief.
Mr. Guterres then drew attention to external funding, saying that aligning incentives in global financial systems with the SDGs would boost confidence “to relaunch investment in sustainable development”.
Turning to illicit financial flow, such as tax evasion and money-laundering, which deprive developing countries of hundreds of billions of dollars annually, he said that “we must plug the leaks” by revising national systems and international frameworks.
The UN chief’s final point was the overarching need to “recover better” from the ravages of the coronavirus pandemic.
Stay the development course
COVID-19 has exposed and is exacerbating deep inequalities and injustices that need to be tackled, including for women, who, with typically fewer savings and lower incomes, experience economic impacts worse than men.
“All our efforts must go towards building sustainable and resilient pathways that enable us not only to beat COVID-19, but to tackle the climate crisis, reduce inequality and eradicate poverty and hunger”, underscored the UN chief.
He upheld that we must face these challenging and the corresponding dangers, with “all urgency, seriousness and responsibility”.
“Getting through COVID-19 and recovering better will cost money. But the alternative will cost far more”, concluded the Secretary-General. “This is a global crisis, and it’s up to all of us to solve it”.
New financial architecture
Even before COVID-19, financial constraints posed challenges for developing countries to meet the SDGs. Today, economic and financial shocks triggered by the coronavirus have left many struggling to respond to the pandemic and its social and economic consequences.
President of the General Assembly, Tijjani Muhammad-Bande, maintained that to achieve the SDGs by 2030, “we have to rethink our economic systems”, requiring “leadership, political will and collaborative efforts among a wide variety of actors to safeguard the future for generations to come”.
He highlighted the need to mobilize public, private and external financial resources, for both rapid recovery and for longer-term progress in achieving the 2030 development agenda.
Noting that many developing countries are financially ill-equipped to halt the spread of COVID-19 as well as its social and economic consequences, the Assembly president maintained that “concrete proposals and timely action” were needed to prevent them from “sliding into disorderly defaults”.
“Now is the time to revise the international financial architecture”, he said, arguing that plans must “not only address current liquidity shortages, but also provide durable solutions that create vital fiscal space for investments in sustainable development for countries in need”.
Mr. Muhammad-Bande stressed that COVID -19 and its related economic and social fall-out cannot be addressed in a vacuum, but instead integrated into broader discussions on financing for sustainable development.“The United Nations provides us with a forum to convene all actors and specialised policy communities to address these challenges”, he reminded the meeting.
Our interconnected world
Prime Minister of Canada, Justin Trudeau, called the pandemic “a stark reminder” of how interconnected our world has become, spelling out that “to keep our citizens safe and healthy, we must defeat COVID-19 wherever it is found”.
This requires a global, coordinated plan that will also facilitate global and domestic economies to bounce back.
Jobs and businesses in every country depend on “the health and stability of economies elsewhere” – all of which is hinged on the success of the global economy in weathering this storm, said the co-convener of the high-level summit.
“COVID-19 is an unprecedented challenge for our modern world, but it’s also a unique opportunity to build a better future, to create a safe and prosperous world”, he added.
Sharing the gavel, Andrew Holness, Prime Minister of Jamaica, called the pandemic “a wake-up call” for the international community to reinvigorate a comprehensive system of global economic governance “that can cope with global disruptions while promoting inclusive development”.
He said a big challenge for the international financial system, was to channel public and private credit flows, into productive, inclusive developmental capital flows:
“The work streams on global liquidity and financial stability as well as debt vulnerability, should inform our response to the financial dimensions of this crisis”, endorsed the Jamaican Prime Minister.
Global response actions
• Safeguard development gains by expanding liquidity in the global economy and maintaining financial stability.
• Save lives and livelihoods of people worldwide by addressing debt vulnerabilities for developing countries.
• Create a space for private sector creditors to engage in timely solutions.
• Enhance external finance for inclusive growth and job creation.
• Prevent illicit financial flows by expanding fiscal space and fostering domestic resource mobilization.
• Align recovery policies with the Sustainable Development Goals (SDGs) to ensure a sustainable and inclusive recovery.
No pathway to reach the Paris Agreement’s 1.5˚C goal without the G20
“The world urgently needs a clear and unambiguous commitment to the 1.5 degree goal of the Paris Agreement from all G20 nations”, António Guterres said on Sunday after the Group failed to agree on the wording of key climate change commitments during their recent Ministerial Meeting on Environment, Climate and Energy.
“There is no pathway to this goal without the leadership of the G20. This signal is desperately needed by the billions of people already on the frontlines of the climate crisis and by markets, investors and industry who require certainty that a net zero climate resilient future is inevitable”, the Secretary General urged in a statement.
The UN chief reminded that science indicates that to meet that ‘ambitious, yet achievable goal’, the world must achieve carbon neutrality before 2050 and cut dangerous greenhouse gas emissions by 45 % by 2030 from 2010 levels. “But we are way off track”, he warned.
The world needs the G20 to deliver
With less than 100 days left before the 2021 United Nations Climate Conference COP 26, a pivotal meeting that will be held in Glasgow at the end of October, António Guterres urged all G20 and other leaders to commit to net zero by mid-century, present more ambitious 2030 national climate plans and deliver on concrete policies and actions aligned with a net zero future.
These include no new coal after 2021, phasing out fossil fuel subsidies and agreeing to a minimum international carbon pricing floor as proposed by the International Monetary Fund (IMF).
“The G7 and other developed countries must also deliver on a credible solidarity package of support for developing countries including meeting the US$100 billion goal, increasing adaptation and resilience support to at least 50% of total climate finance and getting public and multilateral development banks to significantly align their climate portfolios to meet the needs of developing countries”, he highlighted.
The UN Chief informed that he intends to use the opportunity of the upcoming UN General Assembly high-level session to bring leaders together to reach a political understanding on these critical elements of the ‘package’ needed for Glasgow.
A setback for Glasgow
The G20 ministers, which met in Naples, Italy on July 23-25, couldn’t agree to a common language on two disputed issues related to phasing out coal and the 1.5-degree goal, which now will have to be discussed at the G20 summit in Rome in October, just one day before the COP 26 starts.
Economic Recovery Plans Essential to Delivering Inclusive and Green Growth
EU member states must ensure careful and efficient implementation of economic recovery plans that support inclusion and growth to bounce back from the worst impacts of the COVID-19 pandemic, says a new World Bank report.
The World Bank’s latest EU Regular Economic Report – entitledInclusive Growth at a Crossroads – finds that the unprecedented and exceptional policy response of governments and EU institutions has cushioned the worst impacts on employment and income. However, the pandemic has exposed and exacerbated deep-seated inequalities, halting progress in multiple areas including gender equality and income convergence across the EU member states. A further three to five million people in the EU today are estimated to be ‘at risk of poverty,’ based on national thresholds benchmarked before the crisis.
The report highlights that effective recovery programs can reinforce progress on the green and digital transitions underway across the region. With the crisis continuing to unfold, government support schemes and the rollout of vaccines in a timely manner will remain essential to bolstering the resilience of firms, workers, and households. Given the longevity of the crisis and the impact on the most vulnerable, many governments have opted to extend the duration of support throughout 2021.
“A green, digital and inclusive transition is possible if economic policy is increasingly geared towards reforms and investment in education, health and sustainable infrastructure,” said Gallina A. Vincelette, Director for the European Union Countries at the World Bank.
With an output contraction of 6.1 percent in 2020, the COVID-19 pandemic has triggered the sharpest peacetime recession in the EU. Governments will need to ensure targeted and active labor market policies are in place to support an inclusive recovery. The report highlights that special attention should be given to already vulnerable workers such as youth, the self-employed, and those in informal employment. These groups are more likely to face employment adjustments during the crisis and may face longer spells of unemployment or periods outside the labor force.
Women have been disproportionately impacted by work disruptions during the pandemic, particularly in the sectors facing the worst effects of the crisis. This was also highlighted in the 2020 Regular Economic Report produced by the World Bank, which found that at least one in five women will face difficulty returning to work compared to one in ten men. It has been harder for women to resume work due to the sectors and occupations that they are working in and because of the additional care burdens that have fallen disproportionately on their shoulders – a manifestation of increasing inequities in home environments.
“As recovery takes hold, it will be important for carefully targeted and coordinated policy support to continue to mitigate the impact of the crisis, with measures increasingly targeted towards vulnerable households and viable firms. Policy makers will also need to strike a balance between helping those that need it most, while enhancing the productivity of the economy and keeping debt at manageable levels,” added Vincelette.
World Bank’s Regional Action in Europe and Central Asia
To date, the World Bank has committed more than $1.7 billion to help emerging economies in Europe and Central Asia mitigate the impacts of COVID-19. Since April 2020, around $866 million has been approved through new emergency response (MPA/Vaccines) projects. In addition, up to $904 million is being reallocated, used, or made available from existing projects and lending, including additional financing, to help countries with their COVID-19 response.
The World Bank’s Global Economic Prospects suggests that growth will be strong but uneven in 2021. The global economy is set to expand 5.6 percent—its strongest post-recession pace in 80 years. The recovery largely reflects sharp rebounds in some major economies.
COVAX and World Bank to Accelerate Vaccine Access for Developing Countries
COVAX and the World Bank will accelerate COVID-19 vaccine supply for developing countries through a new financing mechanism that builds on Gavi’s newly designed AMC cost-sharing arrangement. This allows AMC countries to purchase doses beyond the fully donor-subsidized doses they are already receiving from COVAX.
COVAX will now be able to make advance purchases from vaccine manufacturers based on aggregated demand across countries, using financing from the World Bank and other multilateral development banks. Participating developing countries will have greater visibility of available vaccines, quantities available, and future delivery schedules, enabling them to secure doses earlier, and prepare and implement vaccination plans more effectively.
“This important and timely financing mechanism, made possible now by the World Bank and Gavi teaming up on the AMC cost-sharing arrangement, will allow COVAX to unlock additional doses for low- and middle-income countries,” said Dr. Seth Berkley, CEO, Gavi, the Vaccine Alliance. “As we move beyond initial targets and work to support countries’ efforts to protect increasingly large portions of their populations, World Bank financing will help us advance further towards our goal of bringing COVID-19 under control.”
The scalable mechanism brings together COVAX’s ability to negotiate advance purchase agreements with vaccine manufacturers with the World Bank’s ability to provide predictable financing to countries for vaccine purchase, deployment and broader health systems investments. The new mechanism will mitigate risks and uncertainties in country demand and financing ability.
“Accessing vaccines remains the single greatest challenge that developing countries face in protecting their people from the health, social, and economic impacts of the COVID-19 pandemic,” said World Bank Group President David Malpass. “This mechanism will enable new supplies and allow countries to speed up the purchase of vaccines. It will also provide transparency about vaccine availability, prices, and delivery schedules. This is crucial information as governments implement their vaccination plans.”
Countries with approved World Bank vaccine projects that confirm the purchase of additional doses through COVAX will agree with COVAX on the number of doses of a specific vaccine as well as related windows of delivery. On receiving a request from the country, the World Bank will provide COVAX a payment confirmation, allowing COVAX to make advance purchases of large amounts of vaccine doses with manufacturers at competitive prices.
Under the cost-sharing arrangement for AMC countries (92 low- and middle-income countries), COVAX plans to make available up to 430 million additional doses, or enough to fully vaccinate 250 million people, for delivery between late 2021 and mid-2022. There will be several supply offerings where countries will have the opportunity to select and commit to procuring specific vaccines that align with their preferences.
COVAX is co-led by the Coalition for Epidemic Preparedness Innovations (CEPI), Gavi, the Vaccine Alliance and the World Health Organization (WHO). The World Bank and COVAX will work in partnership with UNICEF and the PAHO Revolving Fund as key implementing partners to ensure safe vaccine delivery and supply of materials such as syringes, safety boxes and other items essential for vaccination campaigns.
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