PANDEMIC RELIEF POLICIES NEED MORE RESOURCES, BETTER DESIGN

Pandemic relief measures in developing countries have been limited by modest resources, fear of financial market discipline and policy mimicry.

- ANIS CHOWDHURY AND JOMO KWAME SUNDARAM

Covid-19 has triggered not only an international public health emergency but also a global economic crisis, setting back decades of uneven progress, especially in developing countries.

STRUGGLING TO COPE

The pandemic’s economic and social impacts weigh more heavily on low- and middle-income countries (LMICs). The World Bank estimated that the pandemic pushed 119 to 124 million more people into extreme poverty in 2020.

The Bank also reported disproportionately larger business impacts in terms of closures, drops in sales, greater corporate debt and financial fragility. Meanwhile, households in poorer countries saw greater food insecurity as well as income and educational losses.

It also found public debt surging in many developing economies as a rising number of LMICs had greater difficulties servicing official debt. Facing sharp falls in tourism and export earnings, access to foreign credit for many has deteriorated.

URGENT FINANCING NEEDS

LMICs must address various urgent needs and other short-term problems. They need to finance emergency contagion containment and relief measures for those most adversely hit by the pandemic.

These would minimally include the costs of diagnostic testing, personal protective equipment for ‘frontline’ personnel, medical treatments for those infected, and urgent vaccination to mitigate further infections.

Liquidity support – e.g., low-interest loans and wage subsidies – can also be vital for the survival of businesses and workers. But in most countries, such credit facilities have mainly benefited more influential larger enterprises.