The World Bank leadership must urgently abandon its ‘Maximizing Finance for Development
’ (MFD) hoax. Instead, it should resume its traditional multilateral development bank role of mobilizing funds at minimal cost to finance developing countries.
With the Covid-19 contagion from late 2019 spreading internationally this year, governments have responded, often in desperation. Meanwhile, predatory international law firms are encouraging multimillion-dollar investor-state dispute settlement (ISDS) lawsuits citing Covid-19 containment, relief and recovery measures.
A group composed by women and men, called Nuevo Curso de Desarrollo (New Course for Development) based at the National University of Mexico recently published a document to propose a set of measures to change the current economic policy in Mexico. This proposal responds to a diagnosis of the current situation: at this point of the year, the serious social damage inflicted by the health and economic crisis can already be observed. As we know, in Mexico as in many other countries, there was a great economic disruption caused by COVID. Millions of people ceased to receive income from their work. However, the Mexican government has not carried out sufficient support measures to compensate for these losses. The result is easy to guess: many households have been rapidly impoverished. It is estimated that between 10 and 16 million people in April earned much less to the point of not being able to acquire the basic food basket , a situation that has continued for many of them during May, June and July. And while it is true that more and more workers are returning to their jobs, the losses caused have not been repaired.
Developing country debt has continued to grow
rapidly since the 2008-2009 global financial crisis (GFC). Warnings against debt
have been reiterated by familiar prophets of debt doom such as new World Bank chief economist, Carmen Reinhart
, once dubbed the ‘godmother of austerity
International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned
that developing countries would need more than the earlier estimated
US$2.5 trillion to provide relief to affected families and businesses and expedite economic recovery.
After decades of impressive growth, for the first time, Southeast Asia is experiencing a drop in measured human development. The economic fallout from the COVID-19 pandemic will likely take months to reveal itself and years to put right. Yet, a legacy of mobilizing under constraints is leading Southeast Asia’s pandemic response.
With uneven progress in containing contagion, worsened by the breakdown in multilateral cooperation due to mounting US-China tensions, recovery from the Covid-19 recessions of the first half of 2020 is now expected to be more gradual than previously forecast
Pandemic response measures
In the face of the Covid-19 pandemic, many governments, especially of Organization for Economic Cooperation and Development
(OECD) economies, have introduced massive fiscal and monetary packages for contagion containment, relief and recovery.
There has been much discussion in recent months about how workers who transitioned to working from home—and those who were deemed “essential”—are less affected by the layoffs and job losses brought on by lockdowns than are workers in “social” jobs that require closer human interaction (e.g. restaurant workers). However, our new IMF staff research
suggests that this does not tell the full story.
Covid-19 is expected to take a heavy human and economic toll on developing countries, not only because of contagion in the face of weak health systems, but also containment measures which have precipitated recessions, destroying and diminishing the livelihoods of many.
The recent explosion of private finance has nursed the hope
, dream or illusion that it can be mobilized for the public good, e.g., to achieve the Sustainable Development Goals, associated with Agenda 2030. However, such hopes ignore how changes in financial investing have deeply transformed corporations, national economies and prospects for the world economy and social progress.
Europe, like the rest of the world, faces an extended crisis. An element of social distancing—mandatory or voluntary—will be with us for as long as this pandemic persists. This, coupled with continued supply chain disruptions and other problems, is prolonging an already difficult situation. Based on updated IMF projections
released last month, we now expect real GDP in the EU to contract by 9.3 percent in 2020 and then grow by 5.7 percent in 2021, returning to its 2019 level only in 2022. If an effective treatment or vaccine for COVID 19 is found, the recovery could be faster—but the opposite would hold true if there are large new waves of infection.
They were promised the world but ended up in a Lebanese household. This is the story of many domestic workers in Lebanon. With a 70-year-old sponsor system still in place, domestic workers are tied to their employers with little or no basic rights. The ‘Kafala’ system is the major problem behind what we have been seeing in Beirut in the last months.
The 1971 Bretton Woods (BW) system collapse opened the way for financial globalization and transnational financialization. Before the 1980s, most economies had similar shares of trade and financial openness, but cross-border financial transactions have been increasingly unrelated to trade since then.
COVID-19 continues to race across the African continent. People are dying, and even more are being pushed into hunger and poverty, in many cases risking to overturn years of development gains.
Our world is transfixed by the great human toll and economic impact of the worst global pandemic in a century. For the 65 million inhabitants of small island developing states (SIDS), the impact of the novel coronavirus (COVID-19) is reminiscent of the worst forms of extreme weather events that SIDS contend with annually. Such events cost lives, undermine our hard-earned development gains, and hamper the aspirations and quality of life of our people. Our governments are routinely compelled to shift already scarce resources from social and economic investments to recovery and sustenance in the aftermath of disasters. For decades islands have been treading a development tightrope, which is increasingly precarious with the intensification of adverse climate impacts.
In his early February annual State of the Union address
, US President Donald Trump typically hailed his own policies for increasing wages and jobs to achieve record low US unemployment. Directly appealing to labour for a second term, Trump claimed exclusive credit for the US “blue-collar boom”.
The COVID-19 pandemic pushed economies into a Great Lockdown, which helped contain the virus and save lives, but also triggered the worst recession since the Great Depression. Over 75 percent of countries are now reopening at the same time as the pandemic is intensifying in many emerging market and developing economies. Several countries have started to recover. However, in the absence of a medical solution, the strength of the recovery is highly uncertain and the impact on sectors and countries uneven.
The practical challenge of quickly getting financial support in the hands of people who lost jobs amid the COVID-19 economic crisis has baffled advanced and developing economies alike. Economic lockdowns, physical distancing measures, patchy social protection systems and, especially for low-income countries, the high level of informality, complicate the task. Many governments are leveraging mobile technology to help their citizens.
The Covid-19 pandemic has significantly impacted most economies in the world. Its full impacts will not be felt, let alone measured, until it runs its course. Many countries are still struggling to contain contagion, while the costs on both lives and livelihoods will undoubtedly have long-term repercussions.
Exceptional times call for exceptional action. In response to COVID-19, the IMF has moved with unprecedented speed and magnitude of financial assistance to help countries protect lives and livelihoods. Economic stabilization and a sustainable recovery, however, will require more than financial assistance. For recovery to be sustainable, policymakers will need to strengthen economic institutions that enable resilient, inclusive policies.