Economic policy

“Vaccine policy is economic policy,” stresses IMF chief | News from the International Monetary Fund

The managing director of the IMF and the president of the World Bank both expressed concern over growing global economic inequality on Wednesday after a second day of spring meetings of their organizations.

An unprecedented political response and rapid vaccine development helped pull the global economy from the brink last year, but the outlook is still marked by severe uncertainty and increasingly unbalanced access to wealth and opportunities, the Managing Director of the International Monetary Fund (IMF) said on Wednesday.

“There is light at the end of the tunnel,” IMF Director Kristalina Georgieva told a virtual press conference on the second day of the week-long World Bank-IMF Spring Meetings. “It could have been another Great Depression.”

The IMF on Tuesday raised its forecast for global growth to 6% in 2021 and 4.4% in 2022. But the upgrade is mainly driven by rebounds in the United States, China and India.

“Economic fortunes diverge dangerously,” Georgieva said in presenting the IMF report. Global Policy Agendawhich urges governments to ensure that people have a fair chance for COVID-19 vaccines, economic recovery and a stable future.

With more economic scars possible due to job losses, bankruptcies, extreme poverty and hunger in some countries, Georgieva said recovering business requires stepping up vaccine distribution and ensuring surplus vaccines are transferred to the poorest countries.

“Vaccine policy is economic policy,” she stressed, adding that faster progress to end the health crisis could add nearly $9 trillion to the world’s gross domestic product (GDP). here 2025.

As countries outgrow the coronavirus pandemic in the coming years, Georgieva said, governments should gradually reduce support programs and focus on plans that help rehire or retrain low-skilled workers, young people and workers. women.

Boosting investment in green projects and digital infrastructure in both health and education will require sufficient public funds, added Georgieva, explaining that this could lead to progressive taxation and an agreement on the minimum corporate taxation and international tax rates.

World Bank President David Malpass said Wednesday leaders want to discuss debt contract transparency [File: Florence Lo/Reuters]

More concessional external financing and a further extension of the debt service suspension initiative will help the poorest countries cope with multi-pronged crises. The IMF has proposed a new $650 billion Special Drawing Rights (SDR) allocation, which will provide liquidity to the poorest countries in the form of an international reserve asset. And the demand is strong. Last year, IMF lending to sub-Saharan Africa was 13 times higher than the annual average of the previous decade.

World Bank Group President David Malpass also briefed the press on Wednesday, giving an update on his meetings with the leaders of three blocs of nations – the G7, G20 and G24 – as well as on campaigns to climate action and the private sector.

He said the Group of 20 or G20 welcomed the acceleration of the International Development Association’s 20th replenishment – the World Bank’s method of providing finance to low-income countries, known as the process name IDA20.

Leaders were also keen to discuss debt contract transparency and address unsustainable debt situations, Malpass said.

Malpass pointed to several factors exacerbating inequalities around the world, including unequal access to vaccines, higher interest rates for poor countries, and the lack of bankruptcy options for sovereign nations, which means that poorer countries are grappling with heavy debt.

The World Bank chief also highlighted the inequality in access to credit, noting that people who “do not have impeccable credit ratings” or women who want to start a business often face barriers.