Ideas to Action:
Independent research for global prosperity
From our CGD family to you and yours, we wish you a happy holiday season and a healthier and happier 2021. And, let me offer an enthusiastic farewell to 2020.
Development agencies have some hard choices ahead. COVID-19, overlaid on existing global challenges, is the biggest stress test that official bilateral development agencies have ever faced. With alarming speed, the pandemic has delivered a global economic shock of enormous magnitude resulting in the deepest global recession in eight decades.
Following on from the “Financing Low-Income Countries: Towards Realistic Aspirations and Concrete Actions in a Post-COVID World" conference in October, Mark Plant and Sudhir Shetty outline some of the key themes discussed at the conference.
COVID-19 has highlighted the ways that global public goods play an increasingly important role in the world, in both negative and positive ways. It’s increasingly clear that many of the biggest challenges nations face—and the solutions—won’t be restricted to one nation’s borders. The need for regional or global cooperation has never been greater.
The only way to scale up the global financial response to meet the imminent needs of developing countries is by using all parts of the development finance system—and by making it work much more effectively as a system. This means the global multilateral institutions, of course, but it also includes regional, national, and sub-national development finance institutions.
Andia Chakava, Investment Director at the Graça Machel Trust, joined our launch event to share her reflections on the survey’s formulation and findings. Here we further unpack reactions to the survey’s findings, place them within the broader context of the private investment landscape, and highlight opportunities for improvement to move the field forward.
As the possibility of a new Cold War between the US and China gains traction in some foreign policy circles, the scale of Chinese development finance has taken center stage. A closer examination suggests the cost to China of this lending is distinctly underwhelming. It would be cheap for the US and Europe to match China’s lending numbers –and in the interest of global development if it was done right.
The World Bank has committed to providing $104 billion in financing by next June to help developing countries deal with the COVID-19 crisis. Is that sufficient to meet the needs of developing countries facing a massive growth contraction? And will the bank actually deliver on its pledge?
There are three critical and urgent issues that should rise to the top of the agenda for the upcoming meetings of the G20 and the IMF and World Bank. IMF shareholders should seize the moment to give the Fund a mandate to develop feasible but fit-for-purpose proposals in these areas.
With a surging pandemic, income losses, and a deepening recession, Latin America and the Caribbean is facing a health and economic crisis that will test its financial systems like few events in modern times. The blow, however, can be softened. Banks as well as governments and central banks can play a crucial role, providing financing to lessen the impact on families and firms and to speed the recovery.
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