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IMF Support for COVID-19 Recovery

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IMF Support for COVID-19 Recovery
An image of US dollars and Euro's.

How Can Countries Use their SDRs?

A new allocation of Special Drawing Rights (SDRs) amounting to some $650 billion is now expected the end of August. This allocation of an IMF reserve asset, intended to help countries weather the economic crisis created by COVID-19, will be more than 2½ times the size of the last allocation and substantially boost countries’ gross international reserves. For many low- and middle-income countries (LMICs) these added reserves will provide policymakers much needed room for maneuver as they continue to struggle with huge economic impact of the global pandemic and its aftermath.

An image of melting polar icebergs.

A New IMF Facility to Support the Green Transition?

Climate change poses extraordinary threats to macroeconomic stability and global prosperity, and since the IMF’s purpose is to foster both objectives, its help in addressing these threats is central to its mandate. While the IMF is focusing on how to adapt its policy advice, a strong case can be made too for launching a new lending instrument: a Green Transition Facility.

An image of the IMF logo.

Low-Income Countries Need a Boost for the Recovery. Here's How the IMF Can Step Up

Most observers gave the IMF high marks for its initial response to the COVID-19 crisis. It responded quickly with emergency financing to 86 countries, including a fivefold increase in its concessional lending to low-income countries. And its leadership was quick to recognize that the unprecedented nature of the crisis warranted a different approach to macroeconomic and financial policy.

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In this note, David Andrews looks at one mechanism that could work for using excess SDRs to the benefit of low- and middle-income countries: donating them. It is a simple idea but hardly straightforward, as he demonstrates with a “case study” of how the United Kingdom might do this. The UK’s rules governing the use of its reserves, when overlayed on the IMF’s rules surrounding SDRs, make for a difficult thicket to plow through to effect a donation of SDRs.

An image of a patient receiving the COVID-19 vaccine from a doctor.

A New IMF Pandemic Window Could Provide $30 Billion to Finance Vaccines for Developing Countries

While those lucky enough to live in the United States or Europe fret about the extra weeks before their vaccine jab is scheduled, 6 billion people in developing countries will need to wait months, if not years. COVID-19 vaccine production lags far behind demand, and one reason why developing countries find themselves at the back of the queue is that they were unable collectively to make the firm financial offers for advance purchases when these vaccines were still in the making.

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A new IMF rapid credit window could provide some $30 billion to cover the vaccine financing needs for most developing countries through 2021-22. The mechanism would facilitate collective action to negotiate increased production, the main obstacle to achieving vaccine coverage and rectifying the gross inequities in current distribution. It would remain in place for future global pandemic responses.

A traffic jam on the Ojuelegba Under bridge in Lagos, Nigeria

Africa’s Crisis Recovery Requires Upgrading the Global Financial Safety Net

The COVID-19 pandemic has taken a significant toll on African economies. Despite the significant support for COVID-19 response provided by their bilateral and multilateral partners, African countries continue to face significant financing needs to protect lives and livelihood and bolster prospects for a stronger and more resilient economic recovery. In this light, the time for the international community to go big on supporting Africa’s pandemic crisis recovery is now.

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The COVID-19 pandemic has taken a significant toll on African economies. On the continent, countries continue to face significant financing needs to protect lives and livelihood and bolster prospects for a stronger and more resilient economic recovery. To help meet these needs, the international community must act promptly.

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