To Bolster Global Health Security, What About IMF Gold?

The world’s developing countries have a desperate need for increased international assistance to deal with the coronavirus and its frightening economic fallout. In the 70 poorest, low-income countries, mostly in Africa, almost a million people are facing a daily battle just to stave off hunger, and millions more are at acute risk of falling into extreme poverty, all for no fault of their own or even of their own governments. So there are immediate and compelling calls (UN, IMF, G20, Oxfam) for trillions of dollars of additional economic support to poor countries for the duration of the recessionary effect of the pandemic.

But today the world should be able to walk and chew gum at the same time. COVID-19 is a stunning example of the failure of what public health experts call adequate “preparedness” for the control and prevention of easily transmitted infectious disease. This is the moment for an international initiative to lock in sustained, long-term investment in global health security. Scientists agree the likelihood and frequency of viruses jumping from animals to humans is growing. Encroachment of humans on the habitat of wild animals, in effect the de-wilding of the earth we share, combined with continuing climate change and population growth, make what we think of as a rare event more likely to happen more often.

Pandemics are a global public bad; their prevention is a global public good. Every country has an interest in every other country having a strong Centers for Disease Control and Prevention (CDC), with an effective and open system of disease surveillance and a commitment to rules of the game on disclosure and sharing of vital information about new viruses and their spread. Rich and large, powerful countries have an obvious interest in maintaining funding of their own CDC systems to protect their own populations. On this score the USA lost its way in the last decade, with Congress failing to maintain adequate funding of the CDC and the Trump Administration failing to support strong, credible leadership. China’s failure was not funding but lack of immediate disclosure. The rest of the world can hope these two rivals have learned their lessons.

In rich countries, the US example suggests that sustained and adequate domestic funding of disease surveillance and preparedness is politically a high hurdle. In poor countries, the situation is far worse: there is no real track to run on. The health sector as a whole is chronically underfunded, and within the health sector basic care to save lives inevitably takes precedence. Prevention programs, from vaccination (via Gavi, the Vaccine Alliance) to malaria net provision, depend heavily on international support. Inadequate staffing of disease control in Africa is revealing. Dr John Nkengasong, the head of the continent-wide Africa CDC said recently there are only 1,500 epidemiologists working in all of sub-Saharan Africa, with a population of more than 1 billion people; the USA, with one third the number of people, has almost three times as many employed epidemiologists.

For poor countries, there is no substitute for international support in setting up adequate systems of disease surveillance. Poor countries represent the classic weak link-in-the-chain phenomenon; it was three of the smallest, poorest countries in the world—Liberia, Guinea, and Sierra Leone—where the Ebola virus thrived for far too long; only because of its much lower rate of transmission was the rest of the world saved from its worst ravages. Before Ebola was HIV/AIDS, which originated in non-human primates in Central and West Africa, and brought millions of premature deaths before it has become increasingly contained through treatment.

A simple way to guarantee an adequate flow of long-run, sustained funding for health surveillance and disease control, and to prepare for the next novel virus in the world’s poor countries, is to create an endowment dedicated to that purpose. A $10 billion endowment could generate income of $500 million a year. That is a tiny amount relative to the estimated $4.5 billion gap in global preparedness funding according to a 2017 high-level commission report, and tinier still compared to the $130 billion donors spend on total development aid each year. But it is sufficient to create critical momentum for sustained international attention to the neglected infrastructure of pandemic prevention in the poorest countries.

The IMF owns about 90 million ounces of gold that at market value today is worth about $150 billion. The gold can be called “functionless” for the IMF. It does not generate interest or investment income and it does not constitute collateral against which the IMF could borrow. Its only apparent purpose is to add to the reassurance of the Central Bankers of member countries that their funds are safe with the IMF, or—put another way—to help central bankers sleep well at night. In a 2002 book that one of us (Birdsall) wrote with John Williamson we proposed the IMF tap more of its gold (than it already had) to finance additional debt relief beyond the then-HIPC program for low-income countries. We referred to the needs of countries at that time as being “more compelling than safeguarding against the contingency of Central Bank rationality” (p. 96). (That felicitous phrase probably came from John, one of the world’s finest scholars on international economic policy, and especially on international monetary policy. We mention it here to add to the credibility of the point for unsure readers.)

IMF country members have in fact agreed to tap the institution’s store of gold twice in the last 20 years. In both cases, the organization “mobilized” (an elaborate internal procedure to avoid outright gold sales, which might reduce the market price) a portion of its gold to set up purpose-specific trust funds.

One, in 1999, raised almost $4 billion to finance its portion of the debt relief under the HIPC initiative. The second, in 2009-10, is more relevant for our purposes. In the preceding decade, the demand for IMF lending had fallen, reducing its income from operations. In response, the IMF turned again to its gold, this time to create an endowment-like fund. It The interest income from tapping $4 billion of its gold holdings now helps finance the IMF’s critical non-revenue producing work of financial surveillance. IMF programs of surveillance or monitoring of countries’ financial stability, including of countries’ debt management, provide not only technical help to individual countries but permit in the aggregate its ongoing assessment of risk to global financial stability. IMF surveillance is in short a global public good.

Is it appropriate for the IMF to finance “health” security? Yes, because the lack of health security in an inter-connected world risks, as we now know well, contagion from one country to another. Like climate change, now thankfully firmly on the IMF’s agenda, a new virus knows no borders. When the IMF rescues a country from financial collapse and insolvency, it treats that country as a weak link in the chain of global stability, and may prescribe tough medicine (so-called “conditions”) on that country not only for the country’s sake but to prevent “contagion” of its malady to others.

Of course the IMF does not have the technical capacity to prescribe the exact medicine for weak systems of disease control. There is a logic to its tapping its gold to address a source of global recession and instability. But the use of its global gold resource is in the purview of the World Bank and the WHO, for the World Bank to provide grants or loans for countries and groups of countries to invest in their own effective CDCs, and for WHO to have dedicated funding to strengthen its programs of advising and monitoring those systems, and its capabilities in collecting and curating data on how those systems are working.

Lack of pandemic preparedness anywhere is a global public bad. Surely it is time for the IMF to tap its gold to lock in long-term financing of investments in global health security, and to organize with the World Bank and the WHO the optimal use of the resulting annual income in the weak chain countries of the world.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.

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