The bogey of inflation has been revived. Dubious pre-pandemic economic progress, fiscal constraints and vaccine apartheid were bad enough. Now, ostensibly anti-inflationary measures also threaten recovery and sustainable development.
Vaccine costs have pushed many developing countries to the end of the COVID-19 vaccination queue, with most low-income ones not even lining up. Worse, less vaccinated poor nations cannot afford fiscal efforts to provide relief or stimulate recovery, let alone achieve Agenda 2030.
The pandemic is pushing back the world’s poorest countries with the least means to finance economic recovery and contagion containment efforts. Without international solidarity, economic gaps will grow again as COVID-19 threatens humanity for years to come.
Instead of a health system striving to provide universal healthcare, a fragmented, profit-driven market ‘non-system’ has emerged. The 1980s’ neo-liberal counter-revolution against the historic 1978 Alma-Ata Declaration
Decades of public health cuts have quietly taken a huge human toll, now even more pronounced with the pandemic. Austerity programmes, by the International Monetary Fund (IMF) and World Bank, have forced countries to cut public spending, including health provisioning.
Hopes for an inclusive global economic recovery are fast fading. As rich countries have done little to ensure poor countries’ access to vaccines and fiscal resources, North-South “fault lines
” will certainly widen.
Enhancing relief, recovery, transformation
While the International Monetary Fund (IMF) has revised
rich countries’ recovery prospects upward, the United Nations (UN) notes formidable challenges, especially for developing countries, due to the pandemic.
Despite facing the world’s worst pandemic of the last century, rich countries in the World Trade Organization (WTO) have blocked efforts to enable more affordable access to the means to fight the pandemic.
‘No one is protected from the global pandemic until everyone is’ has become a popular mantra. But vaccine apartheid worldwide, due to rich countries’ policies, has made COVID-19 a developing country pandemic
, delaying its end and global economic recovery.
As rich countries have delayed contagion containment, including mass vaccination, in developing countries, much weaker fiscal efforts in the South have worsened the growing world pandemic apartheid
Too many have swallowed the myth that lowering corporate income tax (CIT) is necessary to attract foreign direct investment (FDI) for growth. Although contradicted by their own research, this lie has long been promoted by influential international economic institutions.
COVID-19 has become a “developing country pandemic
”, retreating from the North’s mass vaccination. With developing countries heavily handicapped, the International Monetary Fund (IMF) warns
of a “dangerous [new] divergence”.
Last week, the largest rich countries, home to most major transnational corporations (TNCs), agreed to a global minimum corporate income tax (GMCIT) rate. But the low rate proposed and other features will deprive developing countries of their just due yet again.
With the pandemic setting back past, modest and uneven progress, huge disparities in containing COVID-19 and financing government efforts are widening the North-South gap and other inequalities once again.
Pandemic relief measures in developing countries have been limited by modest resources, fear of financial market discipline and policy mimicry. COVID-19 has triggered not only an international public health emergency, but also a global economic crisis, setting back decades of uneven progress
, especially in developing countries.
Failure to sufficiently accelerate comprehensive efforts to contain COVID-19 contagion has greatly worsened the catastrophe in developing countries. Grossly inadequate financing of relief, recovery and reform efforts has also further set back progress, including sustainable development.
US Treasury Secretary Janet Yellen has urged
all governments to support a global minimum corporate tax rate of at least 21%. The US is working with other G20 nations to get other countries to end the “thirty-year race to the bottom on corporate tax rates”.
The COVID-19 pandemic continues to take an unprecedented human and economic toll, wiping away years of modest and uneven progress towards the Sustainable Development Goals (SDGs). Developing countries now need much more support as progress towards the SDGs was ‘not on track
’ even before the pandemic.
Illicit financial flows (IFFs) hurt all countries, both developed and developing. But poor countries suffer relatively more
, accounting for nearly half the loss
of world tax revenue.
IFFs refer to cross-border movements of money and other financial assets obtained illegally at source, e.g., by corruption, smuggling, tax evasion, etc. This often involves trade mis-invoicing
and transnational corporations’ (TNCs) transfer pricing
via ‘creative’ accounting or book-keeping.
COVID-19 has set back the uneven progress of recent decades, directly causing more than two million deaths. The slowdown, due to the pandemic and policy responses, has pushed hundreds of millions more into poverty, hunger and worse, also deepening many inequalities.
At least 85 poor countries will not
have significant access to coronavirus vaccines before 2023. Unfortunately, a year’s delay will cause an estimated 2.5 million avoidable deaths in low and lower-middle income countries. As the World Health Organization (WHO) Director-General has put it, the world is at the brink of a catastrophic moral failure
Developing country governments are being wrongly advised to use their modest fiscal resources to pay down accumulated debt instead of strengthening pandemic relief and recovery. Thus, debt phobia risks deepening and extending COVID-19 recessions by prioritising buybacks.