World Bank/IMF show the way

The World Bank and IMF have come together at just the right time and urged governments as well as official bilateral creditors to provide immediate debt relief to the world's poorest countries as they battle the coronavirus threat. The move comes in the backdrop of a fast expanding global lockdown, which is putting weak economies with small reserves at high risk of collapse. The immediate reaction, pretty much across the world, has been provision of immediate liquidity to capital markets as well as relief and stimulus packages for the more vulnerable segments of the real economy. But the governments can only keep throwing money at markets to keep them afloat, especially those with already limited capacity, for a short time. And since there's still no way of knowing just how long these emergency measures of propping up economies to ensure business and production shutdowns will have to continue, the World Bank/IMF initiative, if approved, will provide the world's poorest nations some welcome relief. Just as importantly, it will send a very important signal to international financial markets, which are under severe trauma primarily because of the threat of a number of not-so-resilient economies defaulting on their debt payments.
Few countries understand this particular predicament better than Pakistan, of course. Even before the coronavirus stood the world on its head our best case scenario was ending the current fiscal with double-digit inflation, high unemployment and a growth rate somewhere under three percent. Now, with the interest rate reduction likely to put upward pressure on prices, however limited, and the prime minister's Rs1.25 trillion relief package sure to blow yet another hole in reserves, we will not be able to afford the lockdown beyond a very small window. That is why Pakistan was perhaps the first country to ask international financial institutions (IFIs) and rich nations to write off Third World debt in light of the new reality; or at least defer payments till everybody is able to get a handle on the virus. In fact, even prior to the World Bank/IMF suggestion, Pakistan's prime minister Imran Khan had announced approaching multilateral creditors including the Fund, World Bank and Asian Development Bank (ADB) for loans worth $3.65 billion just so the economy has something in the tank in case of a prolonged shutdown. It is also a very safe bet that the finance ministry will talk to the IMF for some sort of leniency in the ongoing $6 billion Extended Fund Facility (EFF).
Till there's a breakthrough in developing a cure or much of the world's population develops herd immunity to the virus, most countries will stay locked down. That, of course, means that the global economic paralysis will continue. The US Food and Drug Administration (FDA), the global gold standard for the drug approval process, reckons it will be somewhere between 12 and 18 months - for development, lab testing, trial etc. - before any vaccine can come to the market. Till then, considering that around three billion people are confined to their homes at the moment, surviving this emergency basically boils down to the kind of financial reserves countries have access to.
Rich countries as well as IFIs must step forward and help with poor country debt as much as possible. It is reassuring that the world's leading institutions have realised that the coronavirus pandemic has now become a serious threat for the entire human race. And unless everybody comes together, many if not most of us will not be around by the time this storm blows over.