Ideas to Action:
Independent research for global prosperity
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.
Last week Senator Bernie Sanders and Congresswoman Ilhan Omar sent a letter signed by hundreds of lawmakers from 40 countries to the heads of the International Monetary Fund (IMF) and the World Bank, urging them to greatly increase the access of developing countries to financial assistance. They called for a new issue of Special Drawing Rights (SDRs) at the IMF, echoing the earlier plea of Gordon Brown and Larry Summers for at least $1 trillion in new SDRs.
As the coronavirus spreads across the globe and claims an increasing number of victims, calls have been made for the international community to raise and disburse huge sums of money to protect poorer countries, whose poverty and weak health systems make them especially vulnerable.
While the world’s decision makers are now rightly focusing on the COVID-19 crisis and its potentially devastating economic aftermath, the climate change agenda has been moved from the center stage. As the world begins to rethink what the post COVID-19 economic order will look like, climate change will again play a key role. And so will the IMF.
It is now only a question of when, not if, the COVID-19 pandemic will exact its human and economic toll on the poor and developing countries of South Asia, Africa, and Latin America the way it is already ravaging East Asia, Europe, and North America. And when it does, they too will need to respond with exceptional heath and financial measures in the face of this unprecedented global challenge.
When the finance ministers of the G20 countries set up an Eminent Persons Group 18 months ago, many observers were both hopeful and skeptical about the likely outcome. Now that the EPG’s report is out, what’s the verdict on how transformative its efforts will be?
The purpose of this presentation was to use two cases of IMF-supported program conditionality to animate a discussion of the bridge between first-best policy advice and on-the-ground development policy in country-specific political economy contexts. Having been involved as Minister of Finance in the Liberia case, and as Director of the Fund’s African Department in the Mozambique case, I approach the issue from both an outside- and an inside-the-IMF perspective.
The US failure to approve governance reforms at the IMF is what led China to create the Asian Infrastructure Investment Bank. Ben Bernanke is the latest prominent voice to employ this narrative.
This week Senate appropriators failed to include an OK for an International Monetary Fund quota increase in the Senate version of the continuing resolution—the spending bill to keep open the US government for the remaining six months of the fiscal year 2013. The administration had requested Senate appropriators approve a transfer of previous US commitments from one IMF account to another -- a transfer involving virtually no cost for US taxpayers.
Last week our CGD and Peterson Institute colleague Arvind Subramanian called on the IMF to speak truth to power, in an elegant cri de coeur in the Financial Times. The IMF, he notes: “has not provided independent intellectual leadership, most evidently on the eurozone crisis. And it is unprepared to provide stability for the next big global crisis.”
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