Reports that the United Nations Secretary-General Antonio Guterres has called for greater debt relief and new creative financing to help poorer nations deal with the pandemic and prevent their economic recoveries from falling behind are certainly welcome news for a third world country like ours.
A “new debt mechanism” to provide more options — including debt swaps, buy-backs and cancellations — has been suggested as many nations have been reluctant to add debt during the global health crisis, fearing a hit to their credit ratings.
Guterres called on G20 nations to extend the suspension of debtors’ loan payments into 2022, and expand the Common Framework for Debt Treatments to include middle-income countries that request it.
The G20 agreed to suspend debt payments in April last year, but that measure is set to expire at the end of June.
Indeed, rules have to be changed if we are to stem the looming debt crisis. The UN official is right in calling for urgent action from rich nations that attended a high-level meeting of dozens of heads of state as well as International Monetary Fund, World Bank Group and Organization for Economic Cooperation and Development bosses.
Old methods, it seems, are no longer working.
While richer nations had spent an unprecedented $16 trillion on emergency health and economic measures that prevented a downward spiral and setting the stage for recovery, many developing countries cannot invest in such due to financing constraints.
Proof of this is the fact that the world’s least developed countries have spent 580 times less per capita on their Covid-19 response than advanced economies.
Guterres cited stark differences in vaccine rollouts in rich and poor nations, and the poorest are facing “painfully slow” economic recoveries that risk becoming a drag on the global economy.
He criticized developed countries for creating a “stockpile” of Covid-19 vaccines, and called on them to share with the rest of the world to help end the pandemic.
“It’s in the interest of everybody to make sure that as soon as possible and in a fair way, everybody gets vaccinated everywhere and that vaccines are considered to be a truly global public good,” he said.
Now it’s not only arms that are being stockpiled. Even the all-important sera meant to arrest this global pandemic are being hoarded by these developed nations, creating vaccine inequality.
The COVAX international system of vaccine aid to disadvantaged countries, according to the secretary general, is having “difficulties” because “there’s been a lot of hoarding.”
The UN chief criticized the “self-interest” of rich countries for building up vaccine supplies beyond the needs of their populations.
“First, don’t stockpile vaccines,” he said, adding that it “doesn’t make sense.”
“We have been appealing to developed countries to share some of the vaccines that they have bought and, in many situations, they have bought more than what they need.”
What these nations refuse to acknowledge is the fact that ending the pandemic rests on inoculating as quickly as possible the world’s population. Only a mechanism powered by the G20 to put in place such a global vaccination plan would seem to be the best alternative.
Six nations, according to the UN official, have already defaulted on loans, and one-third of emerging market economies are at “high risk of fiscal crisis as more than 120 million people were plunged into extreme poverty over the past year due to the pandemic.”
“Developing countries need access to additional liquidity to respond to the pandemic, and to invest in recovery,” Guterres said.
“The global community must urgently provide the necessary support to all developing countries, otherwise we are in danger of emerging from Covid-19 with a two-speed world.”