Huge economic relief key to avert financial ruin in developing countries amid COVID-19
New York: Even before the COVID-19 pandemic paralysed life, the world was still off track in meeting the Sustainable Development Goals. While it was far from the goals of the Paris Agreement on climate change, Organisation for Economic Co-operation and Development (OECD) estimates showed that private finance flows to developing economies could drop by $700 billion, which is greater than the 2008 financial crisis.
At the same time, there had been tremendous debt vulnerabilities emerging, especially among commodity- and tourism-dependent economies. Undoubtedly, the year 2020 exposed tremendous global fragilities and vulnerabilities.
“Since the beginning, I have pushed for a massive rescue package worth at least 10 per cent of the global economy,” United Nations Secretary‑General António Guterres told in his message to the two-day virtual ministerial-level meeting of the OECD Council, which began today.
As it is, developed countries have provided enormous relief for their own societies as they can afford it. But there is an urgent need to ensure that the developing world does not fall into financial ruin, escalating poverty and debt crises. Specifically, the international community are required to increase resources available to the International Monetary Fund (IMF), including through a new allocation of Special Drawing Rights and a voluntary reallocation of existing Special Drawing Rights.
At the same time, many countries urgently need debt relief.
Guterres welcomed the G20’s extension of the Debt Service Suspension Initiative for another six months, but said he will continue to push for extension through the end of 2021, and critically, to expand its scope to all developing and middle-income countries in need.
Also read: G20 decides to extend Debt Service Suspension Initiative by six months
“We must act to address liquidity shortages and free up fiscal revenues to enable a new beginning. We must build a future that guarantees equal rights and opportunities for the world’s women and girls. And we must work for a green recovery that accelerates our response to the climate crisis and ensures a world of net‑zero emissions by 2050,” he said.
The UN Secretary-General urged all Governments to take six climate-positive actions to recover better together from this crisis. Invest in green jobs. Do not bail out polluting industries, especially coal. End fossil-fuel subsidies and put a price on carbon. Take climate risks into account in all financial and policy decisions. Work together in solidarity. And most important, leave no one behind.
“This is the course of action that thousands of companies, cities, states, regions, universities and investors are already choosing by committing to net‑zero emissions by 2050 at the latest,” he reminded them.
Stressing on the need for global solutions to meet global challenges — “whether it is in defeating the pandemic or tackling the climate crisis” — he postulated that the year 2020 had shown how in today’s world, solidarity was self-interest. Solidarity with those suffering from the effects of the COVID-19 pandemic. And solidarity in ensuring a recovery that transforms people’s lives for the better.
“Finance, technology and science are three critical instruments, provided they are available and accessible in both quality and quantity. The pandemic is a wake-up call for a better relationship between science and policy-making, for more effective international technology cooperation, and for building public trust in science,” Guterres said.
It is crucial to look beyond near-term impact, to help secure sustainable results over time and to motivate others to act. “We must emerge from this pandemic on a path of true and lasting sustainable transformation. I count on you to help get us there with renewed global solidarity,” he told the OECD Council members.
– globalbihari bureau
