Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), has said that the world can expect to gain $9trn between now and 2025 if worldwide vaccination is accelerated.
Georgieva also said that, of this amount, 60% would go to low-income countries and emerging markets, with the remaining 40% to go to advanced economies.
The IMF head also laid out three key priorities for the year 2021, namely: pursuing a durable exit from the crisis caused by the novel coronavirus (COVID-19) pandemic; ensuring a sustainable and inclusive recovery; and, halting and reversing a growing divergence between rich and poor countries.
“We are still faced with tremendous uncertainties about the exit from the health crisis and we do have a difficult period ahead,” Georgieva said, “There is scarring from [it] we are yet to address.”
Speaking during a media roundtable this week, she added, “Inequalities within and across countries are on the rise, and we also have incredible opportunities for structural transformation that we need to absolutely pursue.”
On the first priority, which entails enduring recovery, Georgieva cautioned that vaccination of the global population will be an uneven process. International cooperation will be necessary, including full funding for COVAX, a global initiative to ensure fair and equitable access to COVID-19 vaccines.
In terms of sustainable and inclusive policies, the recovery will require coordinated fiscal stimulus aimed at green and digital investment. Another important effort toward this goal will involve helping countries reduce high debt burdens and cope with volatile capital flows.
“We will continue to make the case for sustained policy support until the recovery is firmly underway, and a gradual move to more targeted assistance for the most vulnerable,” Georgieva said, “We will also work with our members on the concept of resilient economies, accelerating the transition to the new digital and climate economy.”
Regarding halting divergence, advanced economies have been able to deploy the equivalent of 20 % of GDP in fiscal support. For low-income countries, fiscal support has only reached the equivalent of 2% of GDP. This disparity threatens to widen the gap even further.
Two important actions on this front will involve pressing private and public lenders to engage in debt restructuring when necessary and to provide more grants and concessional financing, especially in the areas of digital infrastructure and climate resilience.